Global headwinds and lack of supply of quality office space led to a fall of 10% on a year-on-year basis in the office transactions in India during the six months of Jan-June 2017, with 18.1 million square feet getting absorbed. The new supply declined by 5% y-o-y and witnessed 17.9 million sq ft getting added to the office space inventory. However, at 12%, the vacancy levels across India were at the lowest since 2012 when it was 21%.
Though the vacancy levels were higher in Mumbai and NCR with new supply of office space in the peripheral areas of the city, other cities recorded low vacancy levels. It is to be noted that, despite high vacancy levels at an overall basis, prime central business districts in Mumbai and NCR have vacancy levels in single digits.
The average rental values across six cities grew at 7% y during Jan-June 2017, according to the latest Knight Frank India report.
Shishir Baijal, chairman & managing director, Knight Frank India said, “The commercial real estate sector has been the most dependable segment of the overall market. However, some recent geopolitical disruptions in the advanced economies had a bearing on office transactions even as the country continues to grapple with shrinking commercial real estate”.