Mumbai’s Commercial Real Estate Market

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Oct. 19 – The Indian economy has witnessed astounding growth over the past decade and is likely to be one of the fastest growing economies in the coming years. In particular, the real estate sector in India has assumed greater significance with the liberalization of the economy, as increasing business opportunities and labor migration have led to greater demand for commercial and housing space.

India’s financial capital of Mumbai is also known as the greatest real estate market in India, due partly to its large population of approximate 19 million people. Below, we summarize the city’s main business districts, costing concerns, and the key feature of the market.

Mumbai Business Districts

The total business of office space (both sales and lease) in Mumbai from January to March this year has been 1.04 million square feet as compared to 0.88 million square feet in the corresponding period in 2011. Further data shoes that while the banking, financial services and insurance (BFSI) sector has been the main sector of the office-space market in Mumbai, office-space transactions in the IT/ITES sector have been reduced by half due to the ongoing debt crisis. The Mumbai commercial office space market has been gradually improving from the global economic slowdown even though demand has remained resilient during this time.

Renting an office in Mumbai can be extremely costly. Land may run as high as 700 euros per square meter per year, making it the one of the most expensive cities in the world. However, quality offices in central business districts can be found in the city with rents of around 500 euros per square meter per year. Cheaper, often lower quality, options exist as one moves away from the city’s geographic center with costs of around 100 euros per square meter per year.

The presence of international companies also increases the value of sales or rentals for local businesses, who are usually more than pleased to pay a premium for the opportunities they will gain from being headquartered in such location.

Key Features

  • Typical lease term: Leave and license agreement for five years with break clause after 3 years. Rent is paid on a monthly basis
  • Lock-in period: It is the period during which the tenant guarantees to stay in the leased property. It can vary from 24 to 36 months with a notice period from 3 to 6 month before the end of lock-in
  • Security deposit: Refundable- typically between 6 to 9 months’ rent
  • Maintenance costs: Around INR 15 per square foot per month for an “A grade” building
  • Included services: It includes all property management services (Security, cleaning of commons areas, waste management, lift maintenance, central air conditioning costs with power back-up and maintenance)
  • Tenant Representative Fees: Between 1 to 2 months’ rent

Main taxes:

  • Municipal tax: INR6 to INR25 per square foot per month (included in the rent)
  • Service tax: 12.36 percent of the rent amount, paid monthly
  • Rent escalation / indexation: 15 percent every three years or 5 percent every year

Additionally, there many factors which usually considered by the tenants or the buyers in India, such as the transportation time, public infrastructure, development of the particular area and the taxes.

Please note that content from this article has been taken from the AOS Studley study on the Mumbai commercial real estate market.

For more information, please E-mail Mr. Prakrut Mehta at or visit

AOS Studley
Level 7, Vibgyor Towers, C 62, G Block
Bandra Kurla Complex (BKC), Bandra E, Mumbai – 400 051
Mobile: +91 98 20 600 730