As much as 10 million sq ft of office space was absorbed during April-June this year reflecting a positive impact of the implementation of the government's policy initiatives like RERA on the overall real estate sector, as per a recent survey.
According to the study conducted by CBRE South Asia on leasing activity for prime office space across eight cities, 10 million sq ft was occupied in Q2 2017, registering a 28 per cent growth from January-March 2017 period.
Sectors like IT/ITeS, BFSI and engineering and manufacturing continued to drive the corporate leasing activity.
"Similar to earlier quarters, leasing activity was driven by small and medium-sized transactions accounting for almost 90 per cent of all transactions reported in Q2 2017," the report stated.
During the said quarter, leasing activity was led primarily by Bengaluru, the NCR and Hyderabad. Hyderabad witnessed significant activity during the quarter, overtaking Mumbai in leasing activity. Another city that witnessed a rise in q-o-q space take-up was Kolkata.
According to the report, the share of the US-based corporates in quarterly transaction activity increased from 44 per cent in Q1, 2017, to 50 per cent in Q2, 2017, while share of domestic corporates rose from 33 per cent to 37 per cent during April-June period.
On the supply side, development completions more than doubled on a q-o-q basis during Q2, 2017, with about 8.2 million sq ft of development completions reported during the period.
Bengaluru and Hyderabad accounted for more than 60 per cent of the supply addition, followed by Pune and Mumbai, it said.
"Despite a dip in our GDP numbers during the March 2017 quarter, India's office market continued to witness sustained activity. With the implementation of several policy reforms underway, including GST and RERA, the fundamentals for the country remain strong," CBRE Chairman of India and South East Asia Anshuman Magazine said.
He further opined that infrastructure development across major cities, growing prominence of smaller cities for corporates, and overall positive sentiment are providing a further boost to the office market which has witnessed a positive momentum over the past two years.
The report also noted that the leasing activity is likely to be marginally impacted in the medium to long-term.
"Due to a deficiency of space in core micro-markets, we expect occupiers to continue moving towards supply-laden peripheral locations, particularly in cost-effective investment grade developments. We also expect an increase in the share of leasing by other prominent sectors such as BFSI, engineering and manufacturing and research and consulting," Magazine added.
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