A commercial property transaction in Mumbai has set a record. The deal was finalized at Rs 450 per square foot, in the financial hub of Bandra Kurla Complex, or BKC. This has taken Mumbai rentals to an all time high. There seems to be no relief for corporates searching for office space in Mumbai. In the past nine months alone, rentals have jumped 40% in the Bandra Kurla Complex. And it does not stop there.

The Limitless Group, a sister company of Dubai-based developer Nakheel, that recently signed a USD 10 billion joint venture with DLF to develop townships in India, has snapped up 12,000 square feet in the IL&FS building. At Rs 450 a square foot, the Limitless Group will pay Rs 54 lakh a month for their office space.

Rents in Mumbai have now superceded Nariman Point and Lower Parel, where they are at Rs 290-350 a sq foot. This recent deal at IL&FS already has builders in the area quoting similar values. It is purely because demand is outstripping supply. Around 12 months ago, the prices were at Rs 250 a square foot, which were very high at that point, but it keeps increasing.  Recently, the British High Commision pre-leased space, in the under construction Naman Chambers, for Rs 350 a square foot. While the Fortune 2000 building and Windsor Plaza are now quoting Rs 330 a square foot compared to Rs 250 six months back.

BKC has only three lakh square feet of commercial space to offer at the moment. And that is a far cry from the current requirement. Industry watchers say that approximately two million square feet of office space will enter this market in the next two years, and that is when corporates could find some respite from soaring rentals.

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