Key cities witness 20 mn sq ft office space supply
The prime office space segment across key cities in India witnessed a supply infusion of more than 20 million sq. ft in the first six months of 2013. According to the findings of CBRE’s latest report, India Office Market View Q2 2013, supply of prime office space across key cities in India witnessed a 16 per cent increase year on year and an 8 per cent increase on a quarter on quarter basis. Around 10.8 million sq. ft of new supply entered the market in Q2 2013; while Q1 2013 witnessed around 9.9 million sq. ft of fresh supply addition. This supply was primarily from large commercial and SEZ developments which were completed in leading markets such as Bangalore, Mumbai, NCR (National Capital Region) and Pune.
Approximately 7 million sq. ft of space was absorbed in this quarter as against 6.6 million sq. ft in the previous quarter. However, downward pressures continued to persist as absorption was down by about 6 per cent when compared to the same period last year. The first half of 2013 witnessed a total of about 14 million sq. ft of space getting absorbed across all leading cities. Transaction activity in Q2 2013 was dominated by NCR, Mumbai, Bangalore and Pune, representing about 88 per cent of the total transacted space during the quarter.
Anshuman Magazine, chairman and managing director of CBRE, South Asia, said, “Despite a large supply infusion into the market, the prevailing global economic outlook continues to play a big part in expansion plans for corporates across the board. Cost reduction continues to be a primary concern and the overall mood in the leasing market remains cautious. I expect this sentiment to continue till the global as well as Indian economic situation improves.”
Supply pressures continued to dictate rental movement with a clear segregation of micro markets in terms of rental behaviour across leading cities, the report said, adding that rents were either stable or appreciated marginally in demand driven micro-markets such as Connaught Place, Gurgaon, BandraKurla Complex, Lower Parel and Outer Ring Road. Rental sentiments in supply driven micro-markets such as Thane, Navi Mumbai, Powai and Vikhroli were on a downward trajectory.