Commercial real estate looking up
Demand for corporate office space in India’s leading cities fir med up in the second quarter of 2015, while market sentiments improved to a large extent. More than 8 million sq ft of commercial office space was taken up across the seven leading cities, translating to a quarter-on-quarter (q-o-q) increase of around 70%, according to CBRE’s India Office Market View for Q2 2015.
This portends well for the residential market. “Going forward if the commercial market continues to perform, this will have a positive impact on the residential market as well,” says Anshuman Magazine, chairman and managing director of CBRE, South Asia Pvt Ltd.
Bengaluru remained the top corporate office destination in the country, with nearly 35% of this total absorption figure being generated in the city, where leasing remained upbeat in completed as well as under-construction projects.
Office space demand in the NCR, Mumbai and Chennai also remained upbeat with several large-sized transaction closures being reported during the period in IT and SEZ developments. Almost 53% of total office space transactions in Q2 2015 was contributed by these three cities, each witnessing a healthy take-up of more than a million square feet of corporate real estate.
The quarter noted strong rental growth (5–6%) in Bangalore’s Central Business District (CBD), while rentals remained stable in the prime office districts of most cities.
Moreover, sustained occupier interest in IT/IT special economic zone (SEZ) projects in Gurgaon and Noida (NCR); Malad/ Goregaon ( Mumbai); North Bengaluru and ORR (Bengaluru), resulted in a quarter-on-quarter rental appreciation of 3–6% in each of these micro-markets.
“Following a subdued first quarter, the second quarter witnessed a rise in office space absorption,” adds Magazine.