Office space absorption across all the leading cities noted double digit
growth in Q2, 2016 – CBRE Report
·
Approx. 3.2million sq. ft. of office space occupied in Q2
2016 (Rise of 48% Q-o-Q)
·
Corporate space absorption reached more than 10 million sq.
ft. (Rise of 46% Q-o-Q)
·
Supply addition remained strong in second quarter, declined
by only about 10% q-o-q
·
IT firms accounted for 45% office space take up, followed by engineering,
manufacturing & BFSI firms USA originated companies occupied 47% of total new office space
in 2016
Chennai:
According to the latest CBRE quarterly report on Indian
office occupancy, corporate space absorption in the country has grown
by 46% in Q2, 2016, to reach more than 10 million sq. ft. The leasing activity
was led by the NCR and Bangalore, which accounted for almost 50% of the total
space take-up in Q2 2016. Meanwhile, the Hyderabad and Mumbai market together accounted for
more than 65% of supply addition in the quarter.
Commenting on the findings of the report, Mr. Anshuman
Magazine, Chairman and Managing Director of CBRE, South Asia Pvt. Ltd. said, “The Indian economic growth story is to continue, numerous policy
initiatives likely to boost the investment sentiment. In the second quarter, we
have witnessed healthy levels of office leasing activity across key cities,
while/as supply addition in the second quarter remained strong. Also, government’s
decision to relax FDI norms for several sectors, allowing REITs and the
newly enacted Real Estate Regulation and Development Act (RERA) 2016, will further
enhance the flow of global capital into the country. Or Also, government’s
recently promulgated/announced progressive legislative reforms will further
enhance the flow of global capital into the country.
 |
| Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia Pvt. Ltd |
Suburban and
peripheral office districts of major cities attracted steady occupier demand in
last quarter. Prominent micro-markets which dominated leasing activity across
cities during the quarter were Whitefield and Electronic City in Bangalore;
NH-8 and DLF Cyber City in Gurgaon; Mount Ponnamalle Road in Chennai; IT
Corridor in Hyderabad; Thane and Navi Mumbai; Hinjewadi and Kharadi in Pune;
and Salt Lake Sector V in Kolkata.
Supply additions were witnessed along the IT
and Extended IT Corridors in Hyderabad; Thane, Kurla and Bandra–Kurla Complex
(BKC) in Mumbai; Salt Lake Sector-V in Kolkata; Sohna Road and Extended Golf
Course Road in Gurgaon, and the Expressway in Noida; Electronic City in
Bangalore; and Guindy, and Vadapalani in Chennai. Supply rationalization
continued in certain emerging micro-markets, mainly due to developers waiting
for occupation certificates or in anticipation of pre-commitments/occupier
interest in under-construction developments. Vacancy levels dropped across most
cities including Delhi NCR, Chennai, Hyderabad, Pune and Bangalore — with the
exception of Mumbai and Kolkata, which witnessed a marginal increase during the
quarter.
A closer look into the demand-supply dynamics on a half-yearly basis
revealed about 17 million sq. ft. of corporate real estate absorption across
the leading cities in H1 2016. In the case of supply, delays in completion
led to development completions falling by about 15% in the first half of the
year as compared to H1 2015, reaching to about 14 million sq. ft. While supply
completions were dominated by the top three cities of Bangalore, NCR and Mumbai in
H1 2015, rationalization in NCR and Bangalore in particular led to Hyderabad,
Mumbai and Kolkata driving development completions during the first half of
2016.
“Corporate occupier demand for office space is expected to continue to
grow in the forthcoming months, with IT/ITeS, banking / financial services and manufacturingfirms
are likely to remain the major demand drivers. Most of the upcoming supply is
concentrated in key micro-markets of the major cities. We expect these projects
to see some traction from pre-leasing activity in the coming quarters.” said Mr. Ram Chandnani, Managing Director –
Transactions & Assets Services, CBRE South Asia Pvt. Ltd.
 |
| Ram Chandnani, Managing Director – Transactions & Assets Services, CBRE South Asia Pvt. Ltd |
The
Central Business Districts (CBDs) of several cities witnessed change in rental
values, with the exception of Delhi NCR, Mumbai and Pune.In the case of
Bangalore, Chennai and Hyderabad, CBD rental values increased by about 2-6%
q-o-q due to sustained demand levels.
Also, the limited upcoming SEZ supply led
to a q-o-q rental increase of 2-12% in SEZ developments across Chennai, Pune,
Hyderabad and Kolkata. The same trend was reflected in IT (rental increase of
2-5%)and non IT(rental increment of 3-9%)developments across the micro markets
of Gurgaon, Pune, Hyderabad, Bangalore and Chennai.
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