Rentals Will Rise Even If Real Estate Prices Stagnate, Say Experts
Developers are in for some good surprise after a long dry haul during recession. Experts are predicting that even if the price hike in property does not sustain for long, rentals will still continue to go up for a while. Office space demand was very low during recession, leading to rental values coming under pressure.
As evidence of the fact that demand for rented premises is going up, experts are quoting the 2.6 million square feet of space, which found new tenants over the last quarter of 2009. This is the biggest that the rental markets have touched since peak times during Q3 of 2007. Rents have also stabilised in prime commercial areas like central
In this optimistic economic condition, developers are beginning to take up work on projects that were halted during recession for lack of funds. With these developments moving towards completion soon and with office space properties becoming available on the market in face of rising prices, tenants may soon have many choices to pick from.
However, this trend will not bring pressure on rents, experts say. The current price hike in property following increased demand and willingness to sell by banks will be curbed by expected interest increases, they have predicted.
Property consultants Cushman & Wakefield have pointed out that a number of vacant spaces have been occupied over the last few months, leading to a shortage now. This is pushing tenants to settle for higher rents as long as they can occupy the space they want. Even though new developments are coming up, the number is still 41% lower than it was a year ago.
