Office mkt absorption dips 37%: Study

Written by feBureau | Chennai | Updated: Apr 10 2013, 06:45am hrs
Signalling that the country is still in the grip of slowdown, the office markets in India registered a downward trend in absorption. The total net absorption across top eight cities was at 3.6 million square feet (m sq ft) in the first quarter of calender year 2013 and denoted a decline of 37% compared with the same quarter last year, according to the latest report by Global Real Estate consultants, Cushman & Wakefield.

The vacancy rates at the end of Q1 of 2013 were noted at 19.6%, representing a rise of 3% from the same quarter last year. Highest net absorption was noted in Pune that also saw an exceptional increase of 30% compared with Q1 of 2012. Bangalore and Chennai saw a significant decline in net absorption levels followed by Mumbai and Hyderabad.

Slower economic growth led to a decline in expansion by companies as cautious sentiments continued through the quarter. Pune saw the highest net absorption of 842,000 sq ft followed by Mumbai and NCR that saw approximately 810,000 sq ft and 775,000 sq ft of net absorption during the quarter. Pre-commitments during the quarter were registered at approximately 515,000 sq ft restricted only to Mumbai and Pune.

Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield, said: As predicted, the first half of 2013 was no different from that in 2012 which recorded slow activity levels. Corporate are cautious, the economic slowdown in global markets continues to affect global markets. Added to this, are the domestic sentiments, which are affected by active political conundrum in the run up to the 2014 general elections. Further, the Union Budget for 2013-14 had very little for corporate houses on the whole, especially the IT/ITeS and BFSI sector, which has put many companies into watchful mode. However, second half of 2013 is expected to witness an increase in activity which is expected to match the activity levels of 2012.

Mumbai witnessed a net absorption of 809,543 sq ft, registering a decline of 37.5% compared with the first quarter of 2012. The market is largely drive by the BFSI sector contributing 21% to overall absorption followed by the IT/BPO (18%) and FMCG (15%).