Commercial leasing on a roll, rose 58% in first half

Office space absorption jumped 58 per cent in the first half of this calendar year to 24 million square feet (sq ft), with Mumbai, Bengaluru and the National Capital Region taking the lead. The overall absorption in the same period last year stood at 15.18 million sq ft in the commercial real estate space.

A report titled 'India's Real Estate Milestones – A 20-year narrative', brought out by the Confederation of Indian Industry (CII) and property consultancy JLL India, said companies leased 8 million sq ft more space in H1 of 2018 to take the total office space leasing volume to 24 million sq ft.

Momentum in the leasing activity was primarily driven by demand from large technology companies, co-working, financial services and global in-house data centres, which was a reflection of the current economic environment.

"Occupiers are not only inclined towards space take-up as part of their consolidation or relocation plans but are also geared up towards expansion-driven space strategy, which is a pointer towards an upswing in the business cycle," the report said.

In terms of financials, too, there was an upswing in the first half. For instance, total volume of investment in the real estate sector touched $3.62 billion (around ~240 billion) during this period. A chunk of this investment came from the IT and commercial sectors.

According to the report, the two sectors attracted close to $2 billion (~131 billion). Retail was in the second spot with overall investment of $300 million (around ~19 bilion), while entity-level investment was at $150 million. Institutional investments in real estate during the 2013-2017 period increased at a CAGR of 63 per cent to a cumulative value of $20.971 billion by the end of 2017.

Cities which contributed the most in the office space absorption were Bengaluru and NCR with an overall leasing contribution of 26 per cent each in H1 of 2018.

A recent Knight Frank report said the office space market rose 13 per cent year on year to 21.7 million sq ft in H1. The residential segment also saw significant traction with 25 per cent y-o-y growth.

According to the report, buyers gained confidence after the implementation of RERA, which prompted them to look at the residential segment.