Mum drops to no 15 in world's most expensive office ladder

Excerpts from India Business Hour on CNBC-TV18 Watch the full show »

Mumbai no longer features among the top ten most-expensive office destinations in the world, a position it has firmly held onto for the last six yrs. CNBC-TV18's Priyanka Ghosh finds out what's going on in India's business capital

An office space at Nariman Point, Mumbai's central business distict or CBD was once a sign of prosperity. But this perception is fast changing as the CBD appears to be losing its sheen.

According to global consulting group, Cushman and Wakefield's latest report, occupancy cost, including rent in Nariman Point has dropped from an average of Rs 300 for a square foot to Rs 275 for a square foot in the past one year.

The bottom-line? Mumbai no longer features among the top ten commercial real estate markets in the world.

According to the report:

• Mumbai has crashed from its 6th position to now 15th
• Hong Kong, London and Tokyo maintained their top three slots from last year.
• New entrants to the top ten rankings were Beijing at number five and Sydney at number seven.
• Other markets in the top ten include Moscow, New York, Rio Di Janerio, Paris and Zurich.

Owing to the Eurozone crisis, several companies, especially in the IT-ITes and financial services sectors are cautious on expansion plans, driving down demand for office space in Mumbai. Analysts say, until global markets stabilise, this is likely to be the trend for now

Hindustan Unilever, The American Consulate and Kotak Mahindra are some of the top corporates who have vacated south Mumbai offices to move to the suburbs, which offer more space and newer infrastructure.

Bandra Kurla Complex, with its plush, swanky offices is now the most sought after office destination in Mumbai but with tepid demand in the commercial real estate market, it will be a while before it can rake in growth and replace Nariman Point as Mumbai's new CBD.