Indian Commercial Property Market

Commercial Property Market 2010 Q4 – Indian Cities record above 18% Vacancy Rates

There are 2 sides to Indian real estate story – While the residential property market is seeing a surge ( in some cases at record rates), on the other hand, commercial property market (office spaces) are still reeling under pressure.

Due to recessionary environment in last 18 – 24 months, the industry saw a huge shift in operations among the developers with interest in the commercial property market towards affordable housing projects as the income levels population at the base of the pyramid investors witnessed a contraction on account of a slowdown.

However, this much-needed shift was not to be before there was an actual supply over-hang in the commercial real estate markets globally.

This was evident from the fact that despite global economy showing signs of growth and recovery, office markets around the world recorded another six-month period of relative weakness, according to a report pertaining to global office real-estate review by Colliers International.

Mumbai Office Space Rental Trend

The report says that about 14.5% commercial office space in Mumbai is still lying vacant. No new project was launched in 4Q-2009. That apart, the office markets in Mumbai will some more new supply in the first half of 2010 in prime areas such as Andheri, Lower Parel, BKC and Thane.

Delhi Office Space Rental Trend

About 19.5% of office real-estate still lay vacant in Delhi. Only a few new projects were launched in New Delhi during 4Q-2009. However, new projects were launched in the adjoining cities such as Gurgaon and Noida – Reason – prior to Commonwealth Games later this year, incremental demand for office space is anticipated over medium term.

Chennai Office Space Rental Trend

The office space report further says that Chennai recorded a highest vacancy rate of about 22.5% in the Asia-Pacific region. Even Bengaluru, which usually witnesses demand for office space for IT/ITES industry, witnessed a vacancy rate of 19%.

Till December 2009, Moscow, Guangzhou and Dubai are among the global list of cities which lead the pack of locations having maximum under-construction office space at 43.5 million sq ft, 34.7 million sq ft and 24 million sq ft respectively.

Chennai is the only Indian city to feature in the list of top 50 cities with maximum under-construction office spaces at around 2.1 million sq ft.

The supply cycle in 2010 continued challenging for the rental performance of individual centers with relatively weaker demand fundamentals. The leasing market has taken a substantial hit on account of the global slowdown and the over hang of new supply created during that period.

The over-supply may increase in 2011 if the insufficient demand dynamics plays out itself, even in the face of current recovery. This over supply in the short term has the potential to act as a dampener on growth in rental levels even with recent wave of optimism around the globe.

Buzziest Brands of 2011

Buzziest Brands of 2011

Buzz is the excitement and interest generated towards a particular brand. It can be positive, negative or even remain neutral. Many brands use different media like TV, newspapers, social media etc. to create a buzz or do the same through innovations in products, targeting new customer and entering new geographies. And many simply use brand associations which target the masses.

Afaqs recently released its survey on Buzziest Brands of 2011, which gives pretty interesting results. Afaqs.com, one of the most visited site for all the news related to advertising, marketing, media relations and communication in India. A shortlist of 60 brands was created where 40 brands were chosen on the basis of 2.5 million searches carried out in 2010 on Afaqs. While the remaining 20 were selected by the editorial committee on the basis of the excitement being present on social media and other forms of digital media.

The top 15 buzziest brands give out a peculiar trend. There are 6 technical brands and 5 telecommunication brands. This makes one realise how important technology has become in today’s world. So let’s discuss the ones in the technical bracket first.

Facebook is currently the buzziest brand and the leader of the pack. This is followed by Blackberry who have repositioned themselves amazingly over the past year or so as the most important thing for 20 something’s.

They are followed by Tata Docomo and Micromax both of whom are becoming the darling of the advertising and communication industry. Micromax is the first Indian handset manufacturer to be in this list and is miles ahead of the declining Nokia which is at number 13. This is followed by Idea, Google, Airtel, Vodafone, Aircel, Nokia and Twitter. Idea and Nokia have gone down drastically due to the former’s poor work on the advertising front and the latter’s inability to fight with competition on all the fronts.

Though Airtel’s rebranding exercise has been a miserable flop, it has managed to rise 7 positions much to everyone’s amusement and surprise. People seem to have lost interest in Vodafone’s zoozoos while Aircel’s communication on future of mobile telephony has positioned it smartly in this segment. Interestingly Twitter has gone down drastically from its 3^rd position last year to the 14^th position this year. Looks like the initially interest has faded out.

The 4 non – techie brands in the list are Volkswagen, Cadbury, Coca – Cola and IPL in that order. All of them are surprises in a list of techie heavyweights or ones which are discussed online much more than the usual brands. But what helped them in some way or the other is the communication, advertising and marketing they created around their brands which got them the buzziest tag.

CEO’s on lease

CEO’s on lease – Latest trend among India Inc?

CEOs are very integral to any organization, infact the buck stops at them! Whether it is steering their company through a very difficult phase or growing it organically / inorganically, they are at the forefront of decisions which affect an organization in various ways. On the other hand when the organization is in the dumps, the CEO is the first to get the blame for all that is wrong. Vikram Pandit had to reduce his salary to $1 when Citibank was in total distress. Eric Schmidt was taken on board as the CEO when the Google founders realised that the need professional hands.

What’s the concept of a CEO on lease?

These days a “CEO on lease” concept has suddenly started gaining traction in the country. Various HR consultancies such as Ma Foi, Hewitt Associates, Adecco, Manpower etc. have various people on their payrolls who work as CEOs for various firms. These people may be senior level executives, retired professionals, senior management who maybe working in the best of the companies.

So what’s the point of taking a CEO on lease?

With the growth of many small and medium sized companies in the country over the years and also the entry of various international players across sectors, the industrial sector has greatly benefited. But many of them face a number of challenges in setting up their businesses, managing through the various approvals from ministries, deciding the finances, marketing and HR policies.

This is why CEO’s on lease come into the picture – Since these companies may not be able to afford a full time CEO with good experience and expertise or may take a lot of time in finding a new one, they may go for this route. And therefore they would contact an HR consultancy and get a CEO on board for around 6-12 months. Once the company has been set up and running, the CEO on lease goes back to the consultancy in search of opportunities for another organization.

So what are the benefits of a CEO on lease?

It is a great career jump for people who may generally not rise so high up the ladder in such a small period of time. Such a position entails them to a lucrative and highly challenging role with a salary package of about Rs 30-60 lakhs.

One can consider an example of German firm TFL who bought over an Indian company to enter India. The person invited to be the CEO temporarily helped the company get the necessary approvals, provide the necessary guidance for the Indian market and also helped in setting structures and the people management models for the company. The fact that he was later hired as the chairman of TFL Quinn India is another benefit which would have happened obviously because they were happy with his role.

CEOs on lease seems to be the in – thing these days! Are you planning to join the bandwagon?