Net absorption of commercial office space in top eight cities in July-September quarter declined by over 50 per cent to 5.4 million sqft (msf) over same period last year, but Hyderabad staged a comeback, as per a report by real estate consultants Cushman & Wakefield.
Lack of quality ready space in key micro-markets at a desirable price has led to many corporations holding out on their leasing plans, despite the overall sentiments for business remaining positive, the report said.
The pre-commitments in same period for future supply saw sharp rise of 75 per cent on y-o-y basis and was recorded at 4.7 msf, pushed greatly by pre-commitments in Mumbai.
Hyderabad made an emphatic comeback with net absorption being recorded the highest at levels of 2.4 msf, while pre-commitments were at 3,85,000 sqft (sf).
Uncertainty over the bifurcation of Andhra Pradesh had pushed many corporates to a wait-and-watch mode in terms of committing to office space in the city. However, post the division, which saw the creation of Telangana, and with the new government coming up with policies for economic growth and stability, the corporate confidence has seen a growth.
In addition to this, the rental value at which quality office space is available in the city has added to the attractiveness of the location. Hyderabad would be the joint capital of Andhra Pradesh and Telangana for a period of ten years, as per AP Reorganisation Act. After that, it would be a part of Telangana.
Meanwhile, Mumbai saw a significant increase in pre-commitments in the third quarter which was recorded at close to 2.9 msf, even while net absorption of office space was relegated to mere 400,000 sf (approx).
Mumbai, which had previously been surviving on demand from sectors like BFSI, media, consulting, etc, saw demand coming in from the IT-ITeS sector, except that there is a paucity of quality office space at right price for the sector in the city, leading to high pre-commitments from this sector.
