The outlook, it says, is optimistic as the BJP-led government seems committed to reforms, fiscal prudence, a target of 7-8 per cent GDP growth over the next five years and a stepping up of the disinvestment process. "All this spells hope for resurgence in volumes in the real-estate sector."

Outright property values continued to fall marginally, but there were few high-value transactions that seem to imply that the worst may be over. The ratio of leave-and-license transactions to outright ones were still in the region of 3:1 owing to buyers unwillingness to commit funds because of the unstable political environment, severe liquidity crunch and steady depreciation of the rupee. There was also a complete absence of investoractivity during the period.

Back in the city, values of grade B residential buildings in non-prime areas of south Mumbai have fallen to below Rs 8,000 a sq ft. Even relatively decent areas such as Churchgate and Colaba were not spared, with deals done at Rs 8,500 a sq ft and Rs 7,700 a sq ft, respectively.

Prime areas in south Mumbai continue to hold firm. Grade A buildings on Napean Sea Road were sold for in excess of Rs 22,000 a sq ft. Grade B buildings on Malabar Hill continue to change hands between Rs 14,000 a sq ft and Rs 16,000 a sq ft. Values of grade A and B buildings on Breach Candy were holding between Rs 17,000 a sq ft and Rs 18,000 a sq ft and Rs 11,000 - Rs 14,000 a sq ft, respectively.

In the suburbs, values of grade B buildings on Pali Hill and Hill Road in Bandra still hover around Rs 9,000 a sq ft to Rs 11,000 per sq ft and Santa Cruz, Khar and Vile Parle between Rs 7,000 a sq ft and Rs 8,000 a sq ft. Grade A properties in those areas still command a premium of up to 50 per cent overthese values.

In the leasing market, rental yields in the prime areas of south Mumbai continue to hover around 7-9 per cent. The figure declines as one goes northwards and almost halves in the distant suburbs. "Overall demand for lease accommodation will rise as a result of the increased take-up in the office sector, driven by greater levels of foreign direct investment expected in the current year," the report says.

The proposed amendment to the Rent Control Act by the Maharashtra government will not immediately increase supply. "Amendment will be pro-tenant, and any changes will be marginal - an increase of about 5 per cent in rent payable," the report says, adding that if the amendment is pro-landlord and harsh on tenants, which is, in itself, highly unlikely, it may lead to an increased supply. In the case of commercial buildings, grade B ones in south Mumbai command between Rs 13,000 a sq ft and Rs 15,000 a sq ft, and in Worli it was at over Rs 14,000 a sq ft. In central Mumbai, a large office spaceowned by Siemens in Prabhadevi went for Rs 9,500 a sq ft. The rates on Andheri- Kurla road were still being heavily negotiated and grade A office space can be clinched at Rs 4,000 a sq ft to Rs 5,000 sq ft.

Rental rates in Nariman Point have fallen below Rs 150 a sq ft a month, chiefly on account of the vast supply available. However, rental yields continue to stay firm at 10 per cent to 12 per cent in most key office locations in Mumbai.

According to Knight Frank, demand activity in retail property transactions will continue to be strong over the next three months, as a lot of retail chains/restaurants are looking to expand their operations. Nonetheless, the current depressed market condition is forcing potential buyers to adopt a wait-and-see policy, but good retail space areas with high foot-traffic areas will continue to be in demand.