Bengaluru is set to witness an estimated 28% decline in net absorption of office space in 2016. Although the demand continues to be very high in the country’s tech capital, the property developers have been unable to supply Grade A office space during the current year, according to top real estate consultants.
The city will witness supply of about 9 million sqft by end of December 2016 as against 12.5 million sq ft absorbed in 2015, Ram T Chandnani, managing director, India, Advisory & Transaction Services, CBRE South Asia said.
During the first six months of 2016 (till mid-June), Bengaluru has seen absorption of 6 million sq ft of Grade A office space, he said. The city is witnessing continued demand from the traditional IT/ITeS sectors, banking and financial services, healthcare and professional services like consulting as well as the e-commerce and start-ups.
The e-commerce sector accounted for about 6% of the total absorption last year. However, this year, the sector has not made any fresh commitments, but will absorb what the companies committed last year, Chandnani added. In 2016, the share of e-commerce will slip to about 5% of the total absorption of office space, he said.
“Over the last decade Bengaluru has emerged as the largest office market in India attracting strong demand from occupiers in information technology and allied industries. Availability of larger floor plates, attractive rentals and government support has made Bengaluru as an attractive destination. However, non availability of ready to move in space has led to a decline in net absorption this year,” Chandnani told FE on the sidelines of CoreNet Global’s annual conference, here on Wednesday.