Bank of China has leased an office space spread across an area of 9,300 sq ft at a rent of Rs 500 per sq ft per month at Maker Maxity, Mumbai, for five years.
This indicates there is still strength in the A-grade commercial market in the financial capital, despite the slowdown.
The leave-and-licence agreement, accessed by Propstack, a real-estate data platform, showed that the deal was signed between Agni Commex LLP and Bank of China Ltd on March 9, 2023, documents showed.
Real-estate brokers told MoneyControl this deal is an outlier in terms of commercial rentals as the average rent for Grade A commercial space in top-end commercial buildings in core Bandra-Kurla Complex is in the range of Rs 260-320 per sq ft per month. The average rent in Maker Maxity is in the Rs 445-475 per sq ft per month range.
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The total area leased out is 9,268 sq ft and the security deposit is Rs 5.56 crore. The bank has taken the fourth floor of Maker Maxity located in Bandra Kurla Complex, Bandra east, Mumbai. It comes with four car parking spaces in the basement, the documents showed.
This deal shows that properties that are most sought-after and well-maintained command higher rentals than other A-grade commercial spaces despite the global headwinds, they said.
Queries have been sent to Agni Commex LLP and Bank of China Limited.
What is the hike in rent for five years?
The agreement is from September 1, 2023, to August 31, 2028. The rent from September 1, 2023 to August 31, 2024, is Rs 46.34 lakh per month; it is Rs 48.42 lakh per month from September 1, 2024, to August 31, 2025; Rs 50.60 lakh per month from September 1, 2025 to August 31, 2026; Rs 52.88 lakh per month from September 1, 2026 to August 31, 2027, and Rs 55.26 lakh per month from September 1, 2027 to August 31, 2028, the documents showed.
This commercial space deal comes in the wake of the Silicon Valley Bank collapse, the preferred bank for startups and venture capital firms. Regulators shut down SVB, which had $209 billion in assets at the end of 2022, on March 10, after a run on the lender.
Consultants said while the SVB crisis is important and may have impacted startups, what is more important from the Indian context is inflation and the Fed rate hike. “If there is a slight moderation in commercial leasing, that is more on account of the already prevailing global headwinds than the Silicon Valley Bank collapse,” said Samantak Das, Chief Economist and Head of Research & REIS at JLL India.
Global recessionary concerns may delay recovery demand touching gross office space leasing of 30-33 million sq ft (msf) in 2023, according to a report by real-estate consultant Colliers.
India’s office sector is likely to see about 35-38 msf of gross leasing in 2023, a recent report by Colliers has said.
The report, published in collaboration with the Federation of Indian Chambers of Commerce and Industry (Ficci), suggests that while the office market in 2023 looks uncertain, leasing activity is likely to pick up in the second half of the year, led by global capability centres, BFSI (banking, financial services and insurance) companies and startups with sound business models.
