Monday, 18 July 2016

Positive Growth - Office Space take-up sets the Pace

The micro-markets of Gurgaon and Noida continue to remain in high demand from corporate occupiers, largely driven by tenant focus on prime IT development.

Though there is a perceptible slowdown in the residential real estate sector in the Delhi NCR, the commercial real estate businesses have posted a healthy growth in the April-June quarter of 2016, which will have a positive bearing on demand for residential units-sooner than later.

According to a report by global consultancy firm CBRE, the NCR registered a positive demand from corporate occupiers, with a total lease out of over 2.6 million sq ft in office space, in the April-June quarter of 2016. This is a 63% quarter-on-quarter (q-o-q) growth over that of the January-March quarter of 2016.

According to the report, India Office MarketView--Q2 2016, the micro-markets of Gurgaon and Noida continued to remain high on the radar of corporate occupiers, largely driven by strong tenant focus towards prime IT development.

The rise in demand for office space across the country indicates an increase in economic activity. Leading cities like NCR of Delhi, Mumbai, Bangalore, Hyderabad, Chennai, Pune, and Kolkata, the report said, registered an overall absorption of over 10.2 million sq ft in office space during the April-June quarter of 2016.

This is a q-o-q growth of nearly 46%, primarily led by the Delhi NCR and Bangalore, which accounted for almost 50% of the total space take-up. Prominent micro-markets dominating leasing activity in the NCR were DLF Cyber City and Sohna Road in Gurgaon, and the expressway in Noida.

But, on the supply front, only 7 million sq ft of fresh office space came into the market during the April-June quarter of 2016. This has led to a marginal tightening of rentals in office space in the country.

In fact, demand for commercial space has been good for quite some time now. The office market in the Delhi NCR saw a take-up of more than 4 million sq ft from January to June in 2016, against 3 million sq ft during the same period last year, posting a 33% growth.

Across the leading cities also, more than 17 million sq ft of corporate real estate was absorbed, in the first half of 2016, showing a rise of 6% over that of the same period in 2015, when absorption stood at over 16 million sq ft.

This sustained high demand for commercial real estate indicates creation of new jobs and, so, the demand for residential units is likely to increase in the near future too.

Demand for housing, however, is muted owing to the uncertainties like delay in completion of projects. But, consultants say, if the absorption of commercial real estate is sustained, it would reflect in the demand for housing units, sooner than later.

Source: PropertyatNeoDevelopers.Wordpress.Com

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