Re-entry of US cos may revive office-space mkt

Written by Sajan C Kumar | Chennai | Updated: Mar 30 2010, 04:04am hrs
The demand-starved commercial office space market is slowly seeing positive signs, with several large and mid-sized US corporates firming up their plans to outsource their work to India for the first time. Major cities like Bangalore, Mumbai and Gurgaon have seen substantial business deals in the last few months and this has led to several new India-based subsidies and back offices which may generate substantial employment opportunities as well.

Experts tracking realty developments say that out of the new jobs being created, 80% will be in the IT sector alone, with the corporate sector accounting for the rest. Also, with new vistas being thrown open by US President Obamas recent healthcare pushwhich may trigger an outsourcing spree in health and knowledge sectorsboth job and office space markets may see major gains. Though the office space market has not been able to bring prevalent vacancies under control, there is scope for growth for realty, according to experts.

In an interaction with the media, Collin Dyer, president and CEO, Jones Lang LaSalle Inc, says India presents a huge opportunity in terms of attracting jobs outsourced by US firms. India has graduated from being a back office hub for Western companies to housing knowledge process outsourcing centres and research and development wings of multi-national firms. Asia, which includes robust nations like India, has shown signs of an economic revival, and these are more evident that those seen in economies like the European Union, because of strong banking and financial systems present here.

According to Jonse Langs India Office Map 2010 findings, the demand for office space is gradually improving with opportunistic tenants taking up space at lower rentals. The markets in Mumbai and Bangalore are leading the property cycle and are likely to recover the earliest among office-space markets. Also, the markets of NCR-Delhi, Chennai and Pune are expected to stabilise sooner that those of Hyderabad and Kolkata.

However, the real estate sector, which has been showing signs of a revival, could come under severe pressure if builders resort to a price hike to cash in on the emerging demand in the residential and commercial office space sectors, says Anuj Puri, chairman and India head, Jones Lang LaSalle Meghraj (JLLM). The builders in Delhi and Mumbai may have hiked the prices of residential apartments when sales were picking up, resulting in a slowdown in apartment sales.