Five Crore Square Feet of Office Space Lying Vacant India : JLL Report

Aboout  5 crore (50 million) square feet of office space across India is currently lying vacant, while the current demand is about 3 crore square feet, annually according to the findings of real estate consultancy company Jones Lang LaSalle (JLL).

According to a JLL report compiled in 7 major Indian cities -  the four metros and Pune, Bangalore and Hyderabad — as of December 31, 2012, the total under construction real estate was valued at $ 17,300 Crore (About Rs.10 lakh crore).

Of this, 76% was residential space, while the remaining was commercial. In the commercial segment, 78% was office space and 22% was retail real estate.

Mr. Anuj Puri, Chairman and Country Head, JLL India, said, “Most of the vacant office space is either in the wrong city or in the wrong part of the (right) city where talent does not want to travel ” 

Pointing out that more thean 55% of the demand for office space came from the IT sector, the wrong cities he referred to were Tier 4 or / 5 cities like Nagpur, Bhopal or / Nashik.

The expected entry of IT &  ITES companies did not happen in these cities as the Tier 1 &  2 cities had expanded to accommodate growth, Mr. Anuj Puri said.

On the rentals front, rents continued to be below the 2008 levels across all Indian cities, with Bangalore the only exception, where rentals had come on par. However, office rentals in all cities were upwardly bound during the last 6 quarters.

The story of residential development has panned out quite differently, Mr. Anuj Puri said.

With 2008 as the baseline, the capital cost of property in Mumbai was 76% higher, Gurgaon stood 52% higher, while Pune had grown by 43% cent. Residences had money for developers while the commercial side was struggling, Mr. Anuj Puri said.

The maximum overhang (excess construction over demand) was in Mumbai, Delhi, while Pune was low at around 10 months. JLL  India has just released it newest white paper on the Pune real estate market.