Of­fice mar­ket wit­nesses record ab­sorp­tion: CBRE

HT Estates - - HTESTATES - HT Cor­re­spon­dent ht­es­tates@hin­dus­tan­times.com

NEW DELHI: Tech cor­po­rates led of­fice space take-up dur­ing the quar­ter with a 25% share, while BFSI firms gar­nered a 24% share. The share of e-com­merce firms rose to 15%, thanks to a few large- sized deals by lead­ing global and do­mes­tic play­ers. Other sec­tors that con­trib­uted to leas­ing ac­tiv­ity were en­gi­neeri ng and man­u­fac­tur­ing, re­search, con­sult­ing and an­a­lyt­ics and co-work­ing/busi­ness cen­tre op­er­a­tors. Pre-com­mit­ments con­tinue to be the pri­mary mode of trans­ac­tion, espe­cially in cities such as Ban­ga­lore that had a dearth of qual­ity ready-to-move-in sup­ply.

Anshuman Mag­a­zine, Chair­man, In­dia and South East Asia, CBRE said, “In­dia’s of­fice mar­ket has be­gun the year on a strong note, dis­pelling fears of tech­nol­ogy and other dis­rup­tions im­pact­ing the mar­ket. With strong eco­nomic fun­da­men­tals, con­stantly im­prov­ing busi­ness en­vi­ron­ment, and the gov­ern­ment’s con­certed ef­forts to im­prove in­fra­struc­ture in our cities, In­dia’s at­trac­tive­ness as a pre­ferred mar­ket in the re­gion for in­ter­na­tional and do­mes­tic oc­cu­piers has only grown.”

Com­ment­ing on the find­ings of the re­port, Ram Chand­nani, Man­ag­ing Di­rec­tor, Ad­vi­sory & Trans­ac­tion Ser­vices, In­dia, CBRE South Asia Pvt. Ltd. said, “Over the past sev­eral quar­ters, pre-com­mit­ments by oc­cu­piers in un­der-con­struc­tion projects has im­pacted leas­ing ac­tiv­ity across In­dia’s of­fice mar­ket. Con­strained sup­ply of ready-to­move-in space, cou­pled with ris­ing rentals, has led to this trend gain­ing trac­tion in re­cent months. The uptick in leas­ing ac­tiv­ity in the first quar­ter is largely due to sev­eral projects get­ting com­pleted.”

Dur­ing the quar­ter, 45% of all the trans­ac­tions were for small­sized spa­ces while mid-sized trans­ac­tions ac­counted for a 42% share. There were a few lar­ge­sized deals, most of which were recorded in Ban­ga­lore, fol­lowed by a few in Mum­bai, Delhi-NCR, Chennai and Hy­der­abad.

CITY HIGH­LIGHTS FOR Q1 2018: Delhi­NCR

Gur­gaon dom­i­nated leas­ing ac­tiv­ity in the city

New sup­ply con­sisted of a few medium-sized non-IT de­vel­op­ments in Gur­gaon and an SEZ de­vel­op­ment along the Noida Ex­press­way

Leas­ing ac­tiv­ity was pri­mar­ily driven by the tech sec­tor, fol­lowed by cor­po­rates from the re­search, con­sult­ing and an­a­lyt­ics, and BFSI sec­tors

Mum­bai

Quar­terly leas­ing ac­tiv­ity wit­nessed an uptick in the city

More than half of the leas­ing ac­tiv­ity was in the Sec­ondary Busi­ness Dis­trict (SBD) and the Pe­riph­eral Busi­ness Dis­trict (PBD) of Powai and Vikhroli

BFSI firms and co-work­ing op­er­a­tors dom­i­nated leas­ing ac­tiv­ity, fol­lowed by firms from in­fra­struc­ture, real es­tate and lo­gis­tics

Rental val­ues re­mained­stable dur­ing the quar­ter

Ban­ga­lore

The city con­tin­ued to lead the coun­try’s of­fice de­mand and sup­ply ac­tiv­ity

Quar­terly leas­ing in­creased sig­nif­i­cantly due to cul­mi­na­tion of pre-com­mit­ments and space take-up in re­cently com­pleted de­vel­op­ments

Leas­ing ac­tiv­ity was pri­mar­ily driven by BFSI cor­po­rates fol­lowed by e- com­merce, re­search, con­sult­ing and an­a­lyt­ics, and tech firms

Rental val­ues across key mar­kets in the city ap­pre­ci­ated marginally dur­ing the quar­ter

Chennai

Trans­ac­tion ac­tiv­ity was led by small-sized deals, mainly by cor­po­rates look­ing to con­sol­i­date/ re­lo­cate op­er­a­tions

Quar­terly leas­ing ac­tiv­ity de­clined marginally while sup­ply wit­nessed an uptick

Tech cor­po­rates con­tin­ued to lead de­mand, in the city

Rents in­creased by about 5-7% in IT build­ings in OMR Zone I, due to low va­can­cies and sus­tained cor­po­rate in­ter­est

Hy­der­abad

Af­ter ro­bust ac­tiv­ity last year, the city wit­nessed a mar­ginal de­cline in leas­ing ac­tiv­ity dur­ing the quar­ter

Sup­ply ad­di­tion waslim­ited to one medium-sized de­vel­op­ment in the ex­tended IT cor­ri­dor

Sus­tained oc­cu­pier in­ter­est re­sulted in a ma­jor­ity of the quar­terly leas­ing ac­tiv­ity be­ing con­cen­trated in the IT cor­ri­dor of the city

Tech firms, fol­lowed by en­gi­neer­ing and man­u­fac­tur­ing and health­care firms, dom­i­nated leas­ing ac­tiv­ity

Rental val­ues in­creased across all mi­cro- mar­kets, thanks to con­tin­ued oc­cu­pier in­ter­est and­short­age of new­sup­ply

Pune

Sup­ply ad­di­tion in­creased on a quar­terly ba­sis in the city while leas­ing ac­tiv­ity de­clined marginally

Tech firms con­tin­ued to dom­i­nate space take-up, fol­lowed by en­gi­neer­ing and man­u­fac­tur­ing com­pa­nies

PBD ac­counted for more than half of the city’s leas­ing ac­tiv­ity dur­ing the re­view pe­riod

Se­lect mi­cro-mar­kets in the city wit­nessed quar­terly rental growth

Kolkata

Quar­terly leas­ing ac­tiv­ity and new sup­ply ad­di­tion de­clined marginally

Rentals re­mained sta­ble across all mi­cro-mar­kets

De­mand­waslarge­ly­drivenby oc­cu­piers from the en­gi­neer­ing & man­u­fac­tur­ing, and telecom­mu­ni­ca­tion sec­tors, fol­lowed by BFSI and co-work­ing firms

Leas­ing ac­tiv­ity was pri­mar­ily con­cen­trated in EM By­pass and Ruby Con­nec­tor in SBD and Salt Lake V and Ra­jarhat in PBD

A strong first quar­ter is indica­tive of the sus­tained growth of In­dia’s of­fice mar­ket across key cities. While the share of tech firms in overall de­mand could drop fur­ther as tech­nol­ogy dis­rup­tions im­pact head­count growth, the in­creas­ing share of other sec­tors in­clud­ing BFSI, en­gi­neer­ing and man­u­fac­tur­ing and re­search and con­sult­ing will bal­ance the overall mar­ket per­for­mance in the long term.

In some cities, this rental growth will be wit­nessed across all mi­cro-mar­kets, while in oth­ers it will be in core lo­ca­tions only.

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