Office space absorption up 46% in June quarter

50 per cent of the total space taken up by NCR & Bengaluru in Apr-Jun quarter

Real estate consultancy firm CBRE in its latest report says there has been a quarter-on-quarter (q-o-q) growth of 46 per cent in office space take-up, primarily led by the Delhi national capital region (NCR) and Bengaluru, which accounted for almost 50 per cent of the total space take-up.

The firm in its India Office MarketView said that 10.2 million sq ft of office space was absorbed during the April-June 2016 quarter. On the supply front, nearly 7 million sq ft of fresh office space came into the market during this period. Hyderabad and Mumbai together led supply addition, accounting for 65 per cent of the total supply of fresh office space across leading cities during the quarter.

According to the report, 17 million sq ft of corporate real estate was absorbed across the leading cities between January and June 2016, translating to a marginal rise of six per cent over the same period in 2015 when absorption stood at 16 million sq ft.

"Despite a muted global economy, India continues to be a favoured outsourcing destination for corporate firms. Recent policy announcements by the government and a stable domestic economy are all expected to attract investments into the country's real estate sector and enable the ease of doing business here," said Anshuman Magazine, chairman and managing director of CBRE South Asia.

He added that the IT sector continued to be the largest demand-driver for office space, accounting for 50 per cent of the total leasing activity recorded in the quarter. This was followed by engineering and manufacturing firms, and the banking, financial services and insurance sector.

The e-commerce segment also saw a slight uptick in office space take-up. This was led mainly by Hyderabad, Delhi NCR and Bengaluru.

"The markets of NCR, Mumbai and Bengaluru continue to lead the demand for corporate office space. Similar to the trend in previous quarters, occupier focus is likely to be concentrated towards prime micro-markets of leading cities. However, we are also starting to see a push towards the supply-laden peripheral locations of these cities. The main reason for this is the availability of cost-effective, investment-grade office space with large floor plates. The interest in these areas is expected to further increase thanks to upcoming infrastructure. Space utilisation and innovative workplace strategies will play a large role in the expansion plans for occupiers," said Ram Chandnani, managing director (advisory and transaction services) at CBRE. Suburban and peripheral office districts of major cities also attracted steady occupier demand.

REALTY REVIEW

• 50 per cent of the total space taken up by NCR & Bengaluru in Apr-Jun quarter
   
• 50 per cent of the total leasing activity recorded in IT/ITeS sector
   
• 7 million sq ft of fresh office space came into the market during the period
   
• 65 per cent of the total supply of fresh office space came from Mumbai & Hyderabad
   
• 21 per cent rise in office space absorption in Mumbai