By Accommodation Times News Services
Though the residential real estate market in the country is down, but commercial real estate is moving upscale, as per a recent report by property consultant CBRE, office space absorption rose by 20 per cent to over 9 million sq ft during July-September period this year in the country’s seven major cities on robust demand from corporate.
Office leasing stood at about 7.5 million sq ft in the year-ago period in these seven cities — Delhi-NCR, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad and Pune.
“Sturdy demand for corporate office space in India’s leading cities strengthened in the third quarter of 2015, sustaining the improvement in market sentiments since the previous quarter,” CBRE said in a statement.
According to its ‘India Office Market View’ for third quarter of 2015, CBRE said “more than 9 million sq ft of commercial office space was taken up across the seven leading cities during the review period, resulting in an annual growth of about 20 per cent and a quarter-on-quarter increase of around 6 per cent”.
Delhi-NCR emerged as the top corporate office destination during the July-September period, attracting nearly 31 per cent of this total transacted space.
Bengaluru has a share of 22 per cent of the total transacted space in the quarter, while Chennai has a share of 17 per cent.
“Continued demand for quality space led to a perceptible strengthening of corporate real estate absorption. This robust transaction activity was primarily driven by space requirements of corporate firms in the IT/ITeS sector (nearly 50 per cent), followed by the banking/financial services sector, and e-commerce companies,” CBRE said.
After registering a high share of 14 per cent in April-June quarter of 2015, e-commerce sector saw a drop in transactions with a share of only about 4 per cent in third quarter of 2015.
CBRE South Asia Chairman and Managing Director Anshuman Magazine said: “Industry sectors such as IT/ITeS and banking/ financial services are likely to remain major demand drivers for office space in our leading cities during forthcoming quarters as well.”
Going forward, he said, other industries that are expected to provide an impetus to office demand are manufacturing/ engineering, e-commerce, research/consulting and pharma.
More than 10 million sq ft of office space was completed during July-September, leading to a quarter-on-quarter rise of around 21 per cent and 44 per cent on a year-on-year basis.
Overall office space supply addition in third quarter of 2015 was the highest over the previous nine quarters. Rental values were largely stable in the central business districts (CBD) of most leading cities.
A steady rise in office space demand led to a quarter-on-quarter rental rise of 2-7 per cent in prominent IT and SEZ developments of Gurgaon; Guindy, Mount Poonamalle Road and Ambattur in Chennai; IT Corridor in Hyderabad; and of Aundh, Hinjewadi, Kharadi and Baner in Pune.
Bengaluru also saw a steady quarter-on-quarter rental appreciation of around 2-6 per cent across office locations.
Rental values of office spaces in Mumbai and Kolkata, however, remained stable.