Saturday, 30 July 2016

Office space take-up rises in Delhi-NCR

Commercial space leasing in Delhi NCR has increased because of large market deals.

The net absorption of office space saw a decline of 18% year-on-year (y-o-y) to be recorded at 14.5 million square feet (msf) across the top eight Indian cities. Activity level was impacted by a significant drop in absorption levels in cities of Chennai (-51%), Pune (-41%), Mumbai (-36%) and Bengaluru (-34%) in the first half of 2016 compared to same time last year, says a report.

The first half of the year was marked by unavailability of quality Grade A space in many cities, while other cities saw prevalence of small-sized deals, which together led to a decline in overall net absorption. In the same period Hyderabad saw a rise in net absorption of 55% year-on-year in the first half of 2016 while Delhi NCR (+39%), Ahmedabad (+27%) and Kolkata (+10%) also recorded a rise in net absorption of office space in the first half of the year, says a report by international consultant Cushman &Wakefield.

Delhi-NCR sees 39% Higher Net Absorption:

Delhi-NCR witnessed 2.4 million square feet of net absorption during the first half of 2016, a surge of 39% from the corresponding period last year. The increase in the overall activities was due to some large-sized deals taking place in the market. All the three zones of Gurgaon and Noida and New Delhi have witnessed activities during the period. However, Noida has seen an increased level of absorption in the second quarter as compared to previous periods. During May-June quarter, Noida accounted for 38% of total grade A net absorption in Delhi-NCR – which is the same proportion as Gurgaon.

Others sub-markets (Sohna Road, Golf Course Road, Udyog Vihar, NH8, Golf Course Extension Road, Dhundahera, excluding Manesar). The spurt in Noida’s net absorption was on the back of increased take-up of space by IT-ITeS companies. Typically, the Gurgaon sub-market has been seeing heightened activity over the last few quarters.

The overall supply levels during the first half of 2016 too witnessed a drop of 7% with Bengaluru, Chennai, Delhi-NCR and Pune witnessing a slowdown in project completion.

“The first half of the year has been a mixed bag for the key markets with large volume locations like Bengaluru and Mumbai seeing a drop in net absorption owing to slower take up of space by IT/ITeS and BFSI sectors. This, however, is going to be only temporary as the second half looks promising. A large number of companies have committed space foreseeing limited availability of upcoming quality stock in select markets which will push up absorption in the second half of the year. These pre-commitments are bound to steer net absorption, going forward. The year began with some outright transactions that would continue in some markets,” says Anshul Jain, managing director, India, Cushman & Wakefield.

“India’s economic growth story remains strong with additional fillip coming in from the government in the form of relaxation of FDI in a number of sectors. There are a few impending changes that will be taking place on the global canvas including the US presidential election and exit of Britain from the European Union, but India’s position will remain strong and favorable backed by the strong GDP growth sustained over the last 18 months. All this will help the office space market remain positive for the year of 2016 with absorption levels remaining positive for the rest of the year, albeit some markets that are oversupplied may still experience high vacancy,” he says.

Absorption up by 55% in Hyderabad:

Improving business climate and the Telangana government’s efforts to create more visibility for Brand Hyderabad led to the city witnessing a steep rise in net absorption in the first half of 2016 to 2.9 msf, a 55% increase from corresponding period last year.

As the city continues to witness strong demand for space from IT-ITeS and technology companies, net absorption during April-June period stood at roughly 1.7 msf, of which 70% came in the form of previously recorded pre-commitments by IT-ITeS companies. Competitive rentals in the city, quality infrastructure and a proactive government have been attracting global companies to increasingly prefer to set up offices in the city.

Source: PropertyatNeoDevelopers.Wordpress.Com

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