CLSA in a report said that their view is incrementally negative on the Information-technology special economic zone (IT-SEZs) leases, which have witnessed net cancellations over the past six months. New enquiries are weak and IT-SEZ vacancy rates are set to jump to 40%-plus in six months.
From the peak of Rs45/sf/month in 2007, IT-SEZ rentals have come off 18% to Rs37/sf/month, and our sources suggest that it will further go down to about Rs33/sf/month in another 3-6 months. This is because IT-SEZ vacancy, now at 32%, is like to cross 40% in another six months.
Institutional brokers suggest that SEZ developers in Hyderabad are in a panic situation, with nearly 7-8m square feet (sf) of IT-SEZ space in the market for leasing, which, at the absorption rate of 2008, will take 6-7 years to clear. The three SEZs we visited - Raheja Mindspace, DLF Gachbowli and Tishman Speyer Gachibowli - have an unleased space of 3.7m sf, with deliveries due over 3-12 months. Raheja has got the land virtually free and can potentially undercut competition by driving the rates further down.
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