Saudi Arabian Airlines took up space for Rs 500 per square feet a month in Maker Chamber VI, Nariman Point in 2007 as against the then prime and Grade A office rental values that stood at Rs 350/sq ft in the same area. Even ABN Amro Bank paid up Rs 500/sq ft for a 3,100 sq ft area in renewing its lease in July-August 2007 at Sakhar Bhawan in Nariman Point.

Adds Mr Roy: "A lot of companies that want to remain in the same building end up shelling out more. However, the huge chunk of supply that will be coming up in Bandra Kurla Complex (BKC) maybe an answer to the acute shortage of supply in Nariman Point and Worli."

Central Business District (CBD) and Jasola are the primary locations in the capital attracting major lease rental transactions. In Delhi, according to market sources, Mitsubishi picked up 3,000 square feet space in Meridian commercial complex for Rs 400/sq ft two months back. This was due to the fact that the particular floor had a higher floor efficiency.

Says Rajeev Talwar, group executive director, DLF: "Rentals are definitely commanding a premium in metros such as Delhi and Mumbai. The urban development ministry has already issued guidelines for conversion of industrial estates to commercial properties. However, Delhi Development Authority (DDA) has yet to announce the conversion rates. Once that happens, lowering of prices may happen as it will lead to more supply in office spaces in the capital."

It appears that until the supply scenario improves, companies looking at setting up shop in Grade A properties in the metros will definitely have to pay much more than the average rentals quoted.