Over 25 per cent rise in q-o-q total office space absorption across seven leading cities, says CBRE’s India Office Market View for Q2 2014

04 Jul 2014 CW Staff

The Q2 2014 saw an approximately 26 per cent increase in quarter-on-quarter (q-o-q) total office space absorption across seven leading cities in India, from a little more than 6 million sq ft in Q1 2014 to nearly 8 million sq ft in Q2 2014, according to CBRE's quarterly office report – India Office Market View – Q2, 2014. A report on the status of investment-grade office spaces in the country's leading cities, this signals the generation of reasonable employment opportunities, adds the newsflash. New Grade A office space addition, meanwhile, grew by 3 per cent q-o-q across these prime locations, to stand at nearly 7 million sq ft in Q2 2014.

"The formation of a stable central government has generated hope for growth and structural reforms in the country's economy, which is expected to provide the necessary growth for the realty sector. Opening up new sectors for investment, while rejuvenating the manufacturing and services sectors, is expected to help in resuscitating demand for corporate office space in the forthcoming quarters," observed Anshuman Magazine, Chairman and Managing Director, CBRE South Asia Pvt Ltd.

Some key findings of this report for the quarter ending June 30, 2014 are as follows:

Transaction activity improved on the back of increased occupier activity. Most investment-grade office markets saw an increase in absorption levels, with Bengaluru, the Delhi National Capital Region (NCR) and Pune attracting more than 70 per cent of the total office space requirements of corporate occupiers during the second quarter.
The IT/ITeS, banking/financial services, manufacturing and pharmaceuticals sectors continued to drive demand for Grade A office space in Q2 2014 across the leading cities. These sectors are likely to remain the prime demand drivers in the forthcoming quarters too.
Bengaluru led new office space supply in the second quarter. The IT city, together with Mumbai and Hyderabad, contributed to more than 80 per cent of the total corporate office supply completed across the top seven cities during the quarter under review. Going forward, significant office space is expected to reach completion in the decentralised locations of leading cities.
Rental values exhibited mixed trends. Rental values in the CBDs of most leading cities remained stable during Q2 2014, while appreciating by nearly 5-6 per cent in the core areas of MG Road/Residency Road in Bengaluru owing to sustained occupier interest. Meanwhile, rentals dipped by 2-4 per cent in Mumbai's Nariman Point, Bandra–Kundra Complex BKC, Worli and Prabhadevi, mainly due to weak occupier demand and existing vacancy pressures. Going forward, supply backlogs are likely to pressurise rental values across most micro-markets in the short to medium term.

The report is in the final stages of production and will be available in a few days.

Further Read:

CONSTRUCTION WORLD in its July 2014 edition has extensively covered the larger (as well as micro) markets, emerging opportunities, demand drivers etc in the Indian commercial landscape. Click here to read on...