Supply in India’s prime office real estate sector fell by a sharp 75% quarter-on-quarter to less than 3 million sq ft in the quarter ended September 2013. In the quarter ended June, 10 million sq ft of fresh office space supply entered the market. On a year-on-year basis, the supply fell by nearly 50%.
Delayed deliveries from previous quarters, along with new projects coming on-stream, had led to an increase of upto 8% q-o-q and about 16% y-o-y in office supply addition in the previous April-June period; but the July-September period witnessed the lowest addition of office space over the past several quarters, according to CBRE South Asia’s ‘India Office Market View’ report for the third quarter of calendar year 2013.
Mumbai led these project completions (36%), followed by Hyderabad (27%), Bangalore (14%) and Delhi NCR (12%) — representing about 88% of the entire office space added during the third quarter of 2013. However, despite leading the total space addition to India’s existing office stock in Q3 2013, Mumbai’s office supply for the quarter declined by more than 50% q-o-q over the previous quarter. Bangalore saw the steepest decline in office space addition in the third quarter, falling by almost 90% q-o-q, and by 65% y-o-y over the same period last year. Delhi NCR accounted for just about 12% of the total supply addition, declining by nearly 80% q-o-q, and by over 80% y-o-y.
“This rationalisation of office space supply across the top urban centres of the country has been largely attributable to the prevailing high vacancy pressures in completed projects and poor commitment levels for under-construction properties. Corporate occupier focus had shifted to consolidation/relocation and more efficient use of their existing real estate portfolio over the past year — a trend which has continued to the present quarter, and is likely to continue in the medium-term,” says Anshuman Magazine, chairman and managing director, CBRE South Asia.