Bandra Kurla Complex, Mumbai's secondary business district, has office space of nearly 12 million square feet and Nariman Point nearly two million square feet.
Property consultants said the new supply will be more than twice the additional space of 6.9 million square feet created in Mumbai in 2007.
According to a newly released report by property consultancy Jones Lang LaSalle Meghraj (JLLM), nearly 8 million square feet of Grade A office space - centrally air-conditioned, well-maintained buildings - is due to be complete in 2008 in key business areas such as Lower Parel, Bandra Kurla Complex and Andheri.
Another 7.4 million square feet of office space will be ready in the next 12 months in suburbs such as Malad, Powai, Navi Mumbai and Thane.
As a result, commercial rentals, which have gone through the roof, are likely to cool by the end of this year. Consultants said Nariman Point could see a correction of 10 to 15 per cent in office rentals and other business areas slightly more than that.
JLLM Chairman Anuj Puri said rents are already settling down in and around Lower Parel. "The rentals in CJ House in Worli, which went up to Rs 550 per square foot, have already come down to Rs 375 per square foot. On the other hand, the rentals in Bandra Kurla, which had nearly touched Rs 450 per square foot, could come down to Rs 350 to Rs 375," he added.
Nariman Point has seen a nearly 150 per cent increase in rentals in the last three years in Grade A office space. In August last year, ABN Amro Bank paid Rs 500 per square foot for office space at Nariman Point's Sahkar Bhawan against Rs 180 it paid for the same space in 2004.
"These are the rents paid by investment banks and foreign investors and not everybody can afford them. The completion of Grade A office space in other parts of the city will have a downward impact of 10 to 15 per cent on the rentals in Nariman Point," said Sanjay Dutt, deputy managing director of property consultancy Cushman & Wakefield.
"Many companies have started moving to the suburbs. Correction is not far away in main business areas," Dutt added.
He said Nariman Point and surrounding areas such as Fort and Churchgate will also get nearly 50,000 to 100,000 square feet redeveloped in the coming months.
Banking major Standard Chartered moved some of its offices to Goregaon (East) and Hindustan Unilever is building its own premises in Andheri.
The major supply will come up in Lower Parel, where property developers Indiabulls Real Estate and DLF are coming up with office space on three mill premises.
Indiabulls is in the final stages of selling 800,000 square feet of office space at its upcoming Indiabulls One Centre in Jupiter Mills, which has a total office space of 1.5 million square feet. The developer is quoting nearly Rs 375 per square foot in Indiabulls One Centre.
The real estate company is also building 1.4 million square feet of leasable area at the adjoining Elphinstone Mill, due to be ready by the end of 2008.
Some major developments to be completed in 2008 in Central Mumbai, which includes business areas such as Lower Parel, Worli and Prabhadevi among others, are Chromium Marathon (300,000 square feet), HDIL (200,000 square feet) and Poonam Chambers (128,000 square feet).