Economic recovery and increased demand for commercial properties from IT sector in the third quarter of 1999-2000, notwithstanding, prices have not witnessed an upsurge in Delhi, Mumbai, Banglore and Chennai, according to the quarterly report of real estate consultants Colliers Jardine.

According to projections, the demand for specialised real estate projects stand at 50 million square feet by 2008. As per rough estimates, IT-enabled services will result in revenue generation of $18 billion per annum by the year 2008.

Total exports from the sector are predicted at $50 billion for the same period. The report said the Mumbai market was witnessing increased user buying which would push up prices marginally in the residential market for quality stock.

Commercial space continued to generate more enquiries specially from IT sector. However, transaction growth rates were lower, the report said adding leases were being sought by corporates across the board but buying intent was low. Real estate prices remained stagnant due to increasing vacancy rates despite economic recovery in the third quarter of 1999-2000, the report said.

``Even with the economy on a recovery path, real estate values in most metros have not witnessed an upward trend mainly due to increase in vacancy, due to completion of projects that were initiated in the boom period of 1992 to 1995,'' the latest edition of India Property Highlights reported.

Stating that metro markets continued to be dull though nascent signs of `buzz' were evident, the real estate consultant said ``there still exists a demand-supply mismatch in the availability of quality spaces in all major markets".

Commenting on vacancy rates, it said in Mumbai's Central Business District of Nariman Point it was eight per cent and 12 per cent in CBD Bangalore during October-December 1999.

In New Delhi, the vacancy rate in Connaught Place was around 15 per cent during the period, it said. Rents and capital values in most Indian cities for both commercial and residential properties had stabiliised over the last quarter, the report said adding retail properties saw a firming-up of both rental and capital values due to scarcity in availability of quality retail space.

Yields of commercial properties had settled in the range of 8-12 per cent, it added. The report states that in Mumbai, the overall demand situation had improved considerably, but owning to high vacancy rates, values were yet to pick up.

The vacancy rate in Bandra-Kurla sector was 50 per cent, however, in the prime buildings of South Mumbai, there had been a definite firming-up in the rental values, it said. In Delhi, the report said, corporates had re-negotiated current leases or shifted to other locations like Noida and Gurgaon while the small investor segment had witnessed some signs of revival.This has resulted in a drop of about five to seven per cent in rental values in prime commercial property areas in the same period.