Office space supply a challenge in next 6 months, says report
MUMBAI : Supply of new office space will remain a challenge in the next six months owing to project delays and lack of quality office space, a recent study revealed.
According to a survey conducted jointly by property consultant Knight Frank, the Federation of Indian Chambers of Commerce and Industry( FICCI) and National Real Estate Development Council (NARDECO), nearly 64% of the respondents believed that new office supply will remain a challenge in the next six months.
“These sentiments coincide with the market reality as well as where the project delays and lack of quality office space in key locations have led to a supply crunch in all the major cities of the country,” the report said.
New office supply has been eluding the market for the past two years and the sentiments in Q2 2017 substantiate this fact, it said.
“The office leasing has been holding steady in the past few years but the leasing volumes in the first and second quarter of 2017 have been low across cities. This is corroborated by the market sentiments as well, where more than half of the stakeholders opine that leasing volume will either hold steady or fall further in the coming six months,” it said.
The report further noted that the pressure on the IT/ITeS sector and the lack of quality supply in key locations has all contributed towards the slowdown in leasing of office space.
However, this lack of supply will lead to an upward pressure on rentals, it said.
According to the report, nearly 86 of the respondents opine that office rental either will remain the same or will move up in the coming six months.
“Office supply will be under pressure and lead to firming up of rentals across cities. Leasing volumes will hold steady in the coming six months,” the report stated.
The report says the pressure on the IT/ITeS sector and the lack of quality supply in key locations has all contributed towards the slowdown in leasing of office space.