Backed by positive economic sentiment and business confidence, office space absorption during January-March quarter increased by 11 per cent to 8.8 million sqft across nine major cities, a survey said.
Office absorption leaped to over 8.8 million sqft, including pre-commitments of 8 lakh sqft, across nine major cities, upping the number by 11 per cent from October-December quarter, as per a report by Colliers International.
"This absorption was primarily derived by the traditional demand driver, technology sector. The growth is mainly backed by positive economic sentiment, business confidence index which increased by 5 per cent in January and the GDP forecast of about 7.5 per cent," Colliers India Senior Associate Director (Research) Surabhi Arora said.
Bengaluru remained the top contributor of the demand with 33 per cent share, followed by National Capital Region (Delhi, Gurgaon and Noida), Hyderabad, Pune and Mumbai.
"The majority of markets are enjoying this growth and overall office market sentiments are optimistic. We anticipate positive momentum in the coming quarter as the overall office leasing pipeline seems strong and is steadily growing," she said.
Arora further said positive economic growth coupled with increasing business confidence index due to government's proactive policy initiatives will be the factors influencing the demand for office space in the coming quarters.
Bengaluru witnessed a total office absorption of 2.65 million sqft, which is a 13 per cent jump from the last quarter.
IT-ITeS (also comprising technology startups and e-commerce companies) continued to remain the leading sector driving this demand with an 88 per cent share in overall absorption, it said.
NCR clocked an overall absorption of 1.42 million sqft with Gurgaon's commercial real estate market recording about 7 lakh sqft of office space uptake in the first quarter of 2016 as compared to 4.5 lakh sqft in the previous quarter, but about 30 per cent less than in Q1 2015.
Delhi and Noida recorded absorption of about 3.4 lakh sqft and 3.8 lakh sqft, respectively.
Hyderabad witnessed robust corporate demand in the first quarter with a gross leasing volume of 1.27 million sqft.
"Hyderabad due to its affordable rents managed to attract
major IT, digital and e-commerce companies, which announced their plans for huge investments to bolster their expanding network of technology development centers and facilities in the city," Arora said.
E-commerce player Amazon committed huge investments to set up its largest facility outside US and leased around 3.50 lakh sqft in Raheja Mindspace in HITEC City.
Apple is also opening its first technology development center in the country and has leased 2.5 lakh sqft.
Pune witnessed stable demand from the IT-ITeS sector as the market experienced over 1.15 million sq ft of absorption in Q1, with Mumbai at 9.3 lakh sqft.
Even though Chennai continued to attract the interest of office occupiers, the absorption levels witnessed a significant dip of 42 per cent from the previous quarter by recording only 7 lakh sqft of absorption, out of which 86 per cent was contributed by the IT/ITes sector.
Kolkata's office market witnessed a slowdown as only 1.7 lakh sqft of real estate was absorbed, which is 32 per cent less than the previous quarter's absorption of 2.5 lakh sqft.
