Office space leasing up 31% in Jul-Sep at about 8 mn sq ft

Written by PTI | New Delhi | Updated: Oct 16 2014, 22:16pm hrs
Office space absorption rose 31 per cent in the country's seven major cities during the July-September period at about 8 million sq ft on higher demand from corporates looking for expansion, property consultant CBRE said today.

Absorption of office space stood at around 6 million sq ft during the same period last year in the seven major cities of the country - Delhi-NCR, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad and Pune.

"Positive market sentiments and a gradual global as well as domestic macro-economic recovery may finally be signalling the beginning of a revival in India's corporate real estate segment," CBRE South Asia Pvt Ltd Chairman and Managing Director Anshuman Magazine said in a statement.

"Various corporate firms, who had put their office space consolidation and expansion plans on hold over the previous couple of fiscals, finally began their transaction processes; and many concluded the same during the penultimate quarter of 2014," he added.

The consultant noted that the third quarter of 2014 saw stable, yet significant demand for office spaces on a quarter-on-quarter basis across the leading urban centres, clocking a total absorption of about 8 million sq ft.

"On an annual basis, investment-grade office space take-up also rose by around 31 per cent," CBRE said.

New grade A office space addition, meanwhile, fell by about 3 per cent q-o-q across key cities, to stand at about 6.7 million sq ft, helping to balance out the supply/demand dynamics in these seven cities.

With the expected increase in India's GDP growth, the commercial real estate market is likely to witness accelerated activity in forthcoming months.

"Rental values for commercial office space remained stable for the most part across cities such as Delhi NCR, Bangalore, Pune and Kolkata; while appreciating across select micro-markets of Chennai and Hyderabad," CBRE said.

Sustained occupier interest in prominent SEZ developments of Chennai led to rental rates rising in the range of 1215 per cent during the quarter. Similar demand trends also led to rental appreciation in select developments along the IT corridor in Hyderabad.

However, subdued demand and existing vacancy pressures caused values to dip by 23 per cent q-o-q in Mumbai's Nariman Point and BandraKundra Complex.

In NCR, the rentals maintained their equilibrium over the previous quarters in most prominent office developments in the Central Business District (CBD) of Connaught Place. Similar trends were noticed across commercial office as well as IT/SEZ segments of Gurgaon and Noida.

"Going forward, rentals are likely to remain stable across most markets due to a significant pipeline of under construction projects," CBRE said.