Scarcity of leased office space sparks investor rush

Large property investors are scrambling to buy commercial towers where tenants have moved in, driving up the capital value of these buildings. However, with rentals failing to catch up, returns from these investments have fallen, real estate brokers and advisors said.

Stiff competition among sovereign wealth funds and large private equity funds for scarce assets has pushed up the capital value of commercial properties at prime locations in Mumbai and Delhi by over 30% in the past five years, real estate advisors and developers said. This has led to rental yield, a measure of rental income earned against the cost of the asset, falling to about 8% from 11% seen five years ago in top real estate markets.


Read more: Live Mint