6.7 mil­lion sq ft ab­sorb in third quar­ter : Col­liers In­ter­na­tional

Accommodation Times - - Nation - By AT News Ser­vices

In­dia’s eco­nomic growth ac­cel­er­ated to 5.7 per cent in the April–June quar­ter, a fig­ure that is much bet­ter than the 4.7 per cent in the same quar­ter of the pre­vi­ous fis­cal year. Ac­cord­ing to var­i­ous in­ter­na­tional agen­cies like In­ter­na­tional Mon­e­tary Fund (IMF), Asian De­vel­op­ment Bank and Moody, 2014 is ex­pected to record an eco­nomic growth of 5.2% to 5.6% in 2014. The over­all down­side risks have re­ceded around the ex­ter­nal sec­tor and fis­cal deficit, and the business con­fi­dence in­dex jumped from 49.9 to 57.4, rep­re­sent­ing a sig­nif­i­cant boost in over­all business sen­ti­ments. The head­line WPI in­fla­tion mod­er­ated to a nearly five-year low of 3.74 per cent in Au­gust 2014 from 5.19 per cent in the pre­vi­ous month.

Grade A of­fice rents re­mained sta­ble in most In­dian mar­kets, with the mar­ginal growth be­ing recorded in Ben­galuru, Pune and Gur­gaon, where oc­cu­pier de­mand has been driven by the thriv­ing tech­nol­ogy sec­tor.

Tak­ing cues from the pos­i­tive eco­nomic sen­ti­ments, In­dia’s com­mer­cial prop­erty sec­tor has been slowly com­ing back on track sup­ported by in­creas­ing business con­fi­dence and the im­prov­ing em­ploy­ment mar­ket. How­ever, strong leas­ing ac­tiv­ity in ci­ties such as Ben­galuru, Pune, Chen­nai and Gur­gaon has con­trasted with the weaker per­for­mance of Delhi, Mumbai and Kolkata mar­kets. Dur­ing the third quar­ter of 2014, the to­tal ab­sorp­tion in eight ma­jor ci­ties in In­dia has been recorded at 6.7 mil­lion sq ft, adding to a to­tal YTD ab­sorp­tion of 23.73 mil­lion sq ft which is marginally less than the fig­ure of 25.24 mil­lion sq ft for the same pe­riod last year. Grade A of­fice rents re­mained sta­ble in most In­dian mar­kets, with the mar­ginal growth be­ing recorded in Ben­galuru, Pune and Gur­gaon, where oc­cu­pier de­mand has been driven by the thriv­ing tech­nol­ogy sec­tor. Ban­ga­lore con­sti­tutes more than 50% fol­lowed by Gur­gaon at 14% and Pune at 13%. Ro­bust de­mand for Grade A of­fice space by tech­nol­ogy com­pa­nies drove this de­mand across the ci­ties. Ten­ants in ex­pan­sion mode re­lo­cated and locked in large of­fice spa­ces with favourable rates in ci­ties like Ban­ga­lore, Pure and Gur­gaon. For in­stance, KPMG and Honey­well pre-com­mit­ted to ap­prox­i­mately 1.6 mil­lion sq ft in Ban­ga­lore, Ac­cen­ture pre-com­mit­ted to around .9 mil­lion sq ft in Pune and Sam­sung took around .5 mil­lion sq ft in Gur­gaon. Col­liers’ View: The mar­ket is vig­i­lantly en­thu­si­as­tic with the new gov­ern­ment prospects to bring in­vestors back into the In­dian mar­ket. The of­fice prop­erty mar­ket is ex­pected to con­tinue to strengthen for the re­main­der of 2014. This strong de­mand will con­tinue in the ci­ties like Pune and Ben­galuru for the short to medium term, as ev­i­denced by the large vol­ume of en­quiries and RFPs in the cur­rently in the mar­ket. The restora­tion of business con­fi­dence is ex­pected to gain steam, on the back of the pos­i­tive business out­look. In 2015, over­all, prop­erty mar­kets are ex­pected to con­tinue to edge fur­ther into re­cov­ery in In­dia. High vacancy lev­els in almost all the ma­jor mar­kets will keep a check on com­mer­cial real es­tate prices. Cau­tion lead­ing to lack of large-scale trans­ac­tions has re­sulted in a re­duc­tion of in­vest­ment vol­umes in early 2013 in a num­ber of mar­kets. How­ever, the of­fice mar­ket has started im­prov­ing and will re­bound in 2015, with eco­nomic con­di­tions sta­bil­is­ing over the course of the year.

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