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Positive sentiments, especially due to general elections, pushed net office space absorption by a whopping 172 per cent in Ahmedabad for the first half (H1) of calendar year 2014.
According to the latest office market report by global real estate consulting firm, Cushman & Wakefield, net office space absorption for the period January to June 2014 stood at 735,600 sq ft as against 270,700 sq ft for the corresponding period last year.
What’s more, of the total net absorption in H1, the first quarter of January-March 2014 contributed 83 per cent. However, office space supply grew by only 15 per cent in the said period at 1.09 million sq ft as compared to 946,500 sq ft for the corresponding period last year.
“The office markets have reacted positively to the outcome of the general elections that has encouraged corporate to view the markets positively. The increase in office absorption has increased in the first half of the year and is expected to be higher in the second half of the year,” said Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield.
The city witnessed net absorption of approximately 128,000 sq ft during the second quarter, approximately 60 per cent of which were in Grade A developments. Leasing activity and net absorption during H1 2014 more than doubled compared to H1 2013 due to substantial levels of pre-committed absorption in the first quarter. In terms of sectors, the IT-ITeS (66 per cent), manufacturing (17 per cent) and BFSI (15 per cent) had the highest share in leasing during the quarter.
Net absorptions during the second quarter were concentrated in locations such as Sarkhej-Gandhinagar Highway (73 per cent) and C.G. Road (27 per cent).
Despite increasing demand, supply declined in the first half of 2014 by 41 per cent year-on-year. Supply during the second quarter stood at 85,000 sq ft compared to 1 million sq ft in the previous quarter. Meanwhile, the low supply and steady absorption resulted in vacancy levels declining marginally to 18.2 per cent at the end of the second quarter. Rental values, which witnessed a correction over the past year, remained stable across all sub-markets during the quarter.
