While metros like Bangalore and Mumbai saw some of the highest demand in corporate office space, Ahmedabad witnessed the lowest addition at 28,000 sft. The increase, according to a latest report by real estate consulting firm Cushman and Wakefield, is due to factors like improving economic sentiments and rising confidence of the corporate sector. However, the rise in demand in Mumbai by 191 per cent was largely concentrated in the Bandra Kurla Complex.
The report attributed low addition of space in Ahmedabad to reduced business confidence and conservative approach from the developers has led to deferment of approximately 200,000 sft of office space, which was expected to come into supply in Q2 2009. As compared to the previous quarter, Ahmedabad witnessed a significantly reduced demand of about 36,500 sft in Q2 2009. With no pre-commitments in the current quarter, absorption accounted for the entire demand.
Moreover, a majority of the demand was recorded in suburban micro markets of Sarkhej Gandhinagar Highway and Satellite Road. With limited supply entering the market, Ahmedabad witnessed stabilisation in vacancy rates which were recorded at 5-6 per cent in Q2 2009. Also, vacancy levels at Satellite Road remains stable at above 14 per cent, while on account of persistent demand from local businessmen, CG Road recorded the lowest vacancy of two per cent.
According to the report, while the total fresh supply registered in Q2 09 was approximately 13 million sft, the gap between demand and supply also grew wider in this quarter with supply outstripping demand by over 50 per cent and increasing the average vacancy across major cities in India to over 13 -18 per cent. Notably, the enquiries for office space have increased over the previous quarter even though the actual transactions were low, the report stated.
“Even while the quarter continued to see subdued demand from the corporate occupants, the second quarter saw increase in office space enquiries. Many corporates who were looking at occupying space during this quarter, withheld their decisions to monitor the political conditions and the union budget. It is widely believed that prices are close to reaching their lowest points and the markets should be largely stable, with corrections only restricted to peripheral locations and IT/ITeS corridors. Thus corporate occupants are likely to act more positively over the next 6-9 months period,” said Arvind Nandan & Sumit Rakshit , Executive Directors, Occupants Solutions.
Rental corrections ranged from 3-10 per cent across most micro markets in key cities of India. The highest correction was recorded in Thane (IT space) which saw a correction of - 25 per cent on account of low demand.
Moreover, vacancy levels across the major Indian cities were recorded in double digits in the average range of 13-18 per cent. However, peripheral locations of most cities registered remarkably high vacancies. The highest vacancy was recorded in Pocharam–Hyderabad of approximately 77 per cent which incidentally was an improvement over the previous quarter. Mumbai and NCR witnessed average vacancies of 14 per cent and 11 per cent respectively which were one of the lowest average city vacancies.
