Gurgaon most preferred office market in NCR with 51% leasing share in 2016

NEW DELHI: Gurgaon remained the preferred choice for opening offices in the National Capital Region (NCR) among companies, grabbing 51% share or 3.88 million square feet of the total office space leased in the region in 2016, according to property consultancy Colliers International.

Noida and Delhi accounted for about 36% and 13% share, respectively, out of the total 7.6 million sq ft office space absorbed in the NCR in 2016, at par with 2015 numbers.

While the technology sector remained the key driver of office leasing activity in Gurgaon with a 32% share, the share reduced from the last year's number of 64%.

In Noida, also the technology sector remained the key demand driver with 60% share.

A total of 41.6 million sq ft of office space was leased last year across the top cities in India, with Bengaluru maintaining its leading position with a 31% share or 12.8 million sq ft of office space leased.

Delhi-NCR took the secnd spot with 18% share of the total occupier demand, followed by Mumbai with 14%, Hyderabad and Chennai with 13% each, and Pune and Kolkata with 9% and 2%, respectively, showed the report.

“In the technology driven markets such as Hyderabad, Bangalore, Pune the demand-supply gap is likely to remain a concern in short term. Tenant appetite for higher quality offices has been reflected in new leases being executed at above market rates in select grade A buildings in all the cities," said Surabhi Arora, Senior Associate Director, Research at Colliers International.

Just 27.2 million sq ft of Grade A office space was released into the market in 2016. "This was insufficient to cope with the very strong demand especially in markets such as Bengaluru, Hyderabad, and Pune and resulted in a significant fall in vacancy levels and an increase in office rents in most of the micromarkets in these cities," she said.

Colliers expects a similar trend in 2017 as well, with an upward pressure on rents at least in the first half of the year in most of the preferred markets for grade A buildings.

However, due to a dearth of quality office space in other technology-driven markets like Pune and Bengaluru, NCR may see increased absorption volumes in the coming quarters due to supply-led demand, feels Arora.

Source: https://goo.gl/zrMdzm

5 mn sq ft of office space absorbed in Q1 of 2016: CBRE India

About five million square feet of office space has been absorbed during first quarter (Q1) of 2016 (January – March) - a drop of approximately 26 per cent year-on-year, according to CBRE’s India Office MarketView.

Following a particularly strong fourth quarter of 2015, the first-quarter of 2016 was comparatively sluggish as most corporate space occupiers were still strategising their real estate plans for the year, with limited transaction decisions being implemented in the first-quarter.

The report said, corporate real estate space take-up during the quarter was led by Delhi National Capital Region (NCR) with a share of 31 per cent of total transacted space in the leading cities, followed by Mumbai (23 per cent) and Bangalore (17 per cent).

Corporate occupier interest remained concentrated towards prominent micro-markets such as Gurgaon in Delhi NCR; Thane, Navi Mumbai, Vikhroli, Goregaon and Andheri in Mumbai; Koramangla, Whitefield and Electronic City in Bangalore; IT Corridor in Hyderabad; and Viman Nagar in Pune.

Occupiers were also seen pre-committing space in under-construction developments, primarily in Mumbai and Gurgaon, largely led by the lack of available space in investment-grade developments at prime locations.

Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia said, “While the first-quarter of the year traditionally witnesses muted transaction activity, the overall sentiment among India’s corporate space occupiers is optimistic. Besides, India continues to remain one of the global key outsourcing destinations which will improve the momentum going forward.”About five million square feet of office space has been absorbed during first quarter (Q1) of 2016 (January – March) - a drop of approximately 26 per cent year-on-year, according to CBRE’s India Office MarketView.

Source: PropertyatNeoDevelopers.Wordpress.Com

Office hubs see 10% rise in rentals on start-up rush

Growing demand for commercial space from start-ups in India led to a 10% increase in rentals in the hubs for these companies over the past one year, according to real estate services firm CBRE.

The top five micro markets that saw rentals moving up include Cybercity in National Capital Region, Koramangla in Bengaluru, Andheri East and Goregaon in Mumbai and Kukatpally , Manikonda in Hyderabad. "The cities that led the demand include Bengaluru and Gurgaon. By 2020, there will be 11,500 start-ups, employing over 250,000 people," said Ram Chandnani, managing director-transaction services at CBRE South Asia.

Nearly 10% of the total office market demand is currently driven by ecommerce companies. This segment barely existed two years ago. In 2015, these companies leased 4.3 million sq ft compared with 0.54 million sq ft in 2014, as per CBRE.

"At a time when quality supply is drying up in the market, the additional demand coming in from e-commerce has surely had a positive effect on the rental values of key ecommerce favorite micro markets like Mumbai's Eastern Suburbs, Whitefield in Bengaluru and NH8 in Gurgaon," said Ramesh Nair, chief operating officer -business and international director at JLL India.

Nair said the demand from e-commerce is generally directed towards quality Grade A spaces which provide large floor plates in the peripheral business districts of various cities including Mumbai, Delhi-National Capital Region, Bengaluru, Chennai and Hyderabad.

Taxi service provider Ola, for instance, recently leased 20,000 sq ft of prime office space at Embassy Golf Links in Bengaluru, while online marketplace Snapdeal rented 0.43 million sq ft in Gurgaon and Pinelabs, a payment solutions firm, leased 60,000 sq ft in Noida.

Housing.com took 0.15 million sq ft on rent in Supreme Business Park, Mumbai and Oyo Rooms leased 0.1million sq ft in Space Palazo, Gurgaon.

"We have been seeing active interest from e-commerce companies, which are now an important segment of our overall portfolio. It is a small but interesting new area and we have been looking at different solutions to respond to this segment," said Mike Holland, chief executive of Embassy Office Parks, a joint venture between Embassy Group and Blackstone.

Source: PropertyatNeoDevelopers.Wordpress.Com

Office space take up jumps most in 2015, can homes be far behind?

The residential property market may be in a funk but office property is literally flying off the shelves. Absorption of office spaces across the country jumped the most in 2015 and it looks set to maintain its momentum this year as well.

About 38 million square feet of corporate real estate space was absorbed in India's top seven cities in 2015, the highest till date, a CBRE report said.

The demand led by Bengaluru with 32% share of the total absorption across leading cities, followed by the National Capital Region with 23% share. Suburban and peripheral office districts of major cities attracted steady occupier demand in the last quarter of 2015.

Experts believe that office property growth will feed into the residential market soon and is often a leading indicator of how home sales might perform in future.

"The positive demand is indicative of an overall improved economic sentiment among domestic and international corporates.

It will result in more jobs getting created and boosting confidence among home buyers," said Anshuman Magazine, chairman and managing director of CBRE South Asia. "I feel, this will gradually bear a positive impact on residential market with improved demand for projects with right price point that fits specific markets."

The growth is reflected in stock market performance of realty developers with leasable or saleable office spaces. In 2015, shares of Godrej Properties and Marathon Nextgen Realty rose 32% and 43%, respectively, while Brigade Enterprises gained 2% in the backdrop of most other realty shares witnessing 2-20% drop.

Real estate analysts expect shares of developers with certain markets exposure to fare well given the fundamentals and positive micro market scenario.

"Shares of companies with exposure to commercial property market in Bengaluru are expected to do well as the market has low vacancy levels and the time is right for appreciation in rentals.

Among the listed players, Prestige Estates and Brigade Enterprises can be a good pick, while DLF is expected to be favored for its exposure to Cyber City, a strong micro market in Gurgaon. BKC is also a strong market," said Sandeepan Pal, analyst, real estate, Motilal Oswal Securities. Companies, especially in the IT/ITeS, ecommerce, financial services and healthcare sectors, have been snapping up office space across major cities.

Interestingly, small and mid-sized deals with less than 50,000 sq ft space accounted for 85% of transactions in 2015, indicating the growth is wide-spread and not restricted to top corporates.

According to CBRE, prominent micro-markets with good demand included Gurgaon in NCR; Powai, Vikhroli, Kanjurmarg, Thane and Navi Mumbai in the Mumbai Metropolitan Region; the Outer Ring Road in Bangalore; the IT Corridor in Hyderabad; the Old Mahabalipuram Road stretch along Perungudi in Chennai; Viman Nagar in Pune; and Salt Lake Sector V in Kolkata. Given the change in demand outlook, developers are reviewing their business plans and strategies.

"The improvement can be easily gauged by rising number of inquiries for office space. Be it outright or lease basis, offices are being picked up clearly for expansion and future growth," said Vipul Shah, MD, Parinee Group.

Source: PropertyatNeoDevelopers.Wordpress.Com

Office space vacancy to see sharpest fall in 2016-17: Report

As corporates implement their growth plans, the vacancy level in office space across the country is expected to decline to just 13 per cent in 2016-17, research from real estate consultancy JLL India showed.

“Corporate occupiers have been in expansion mode. Companies, especially in the e-commerce, telecom and healthcare sectors, have been snapping up office space across major cities,” Ramesh Nair, COO - Business & International Director, JLL India, said in a statement.

Comparison across cities shows that office space vacancy in Bengaluru has reduced from 16 per cent in 2011 to 4 per cent at present, in Chennai it has come down from 32 per cent in 2010 to 12.5 per cent. Hyderabad has seen vacancy reduce from 17 per cent in 2009 to less than 10 per cent at present.

“The sharpest fall in pan-India vacancy is expected between 2016 and 2017 when it will be slightly less than 13 per cent,” according to the research.

In 2015, India’s office space absorption was around 36 million sq ft, the second highest after 2011. But unlike 2011 when absorption was largely limited to newly-completed buildings, in 2015 it was distributed across new and old buildings.

“While the demand in 2011 was due to lower rentals after the global financial crisis; in 2015, it was largely due to implementation of growth plans by corporates.

Interestingly, in 2014, demand had surpassed supply for the first time since 2007. The demand forecast looks strong in the medium-term,” the research said.

With this, developers, who had been shying away from commercial projects after burning their fingers between 2009 and 2012 owing to a lack of understanding of the commercial asset class and lack of funding, are returning to the market, it added.

Source: PropertyatNeoDevelopers.Wordpress.Com

Office space in city expands by 21%

Office space absorption in the city has grown by more than 21% in 2015, compared to the previous year, says the latest office market survey put out by Colliers International, an international realty consultant.

In comparison, Mumbai saw more than 100% increase in office space absorption during the last one year. Noida 45% and Gurgaon 18% also saw significant rise. Absorption in Delhi meanwhile, plunged by 25%. Bengaluru too, which accounts for about 33% of market share, saw a slight dip in absorption, from 13.77 million sq ft in 2014 to 13.43 million sq ft last year.

Thanks to a few big ticket lease transactions concluded by technology majors and banking, financial services and insurance firms (BFSI) like Accenture, Yes Bank, Ericsson and BNP Paribas, about 5 million sq ft of office space was leased out in Chennai in 2015. In comparison, only 4.11 million sq ft commercial office space was absorbed in 2014.

Shriram Gateway SEZ in Perungalathur, India Bulls in Ambattur and Divyashree IT park and SP Infocity on and off Old Mahabalipuram Road accounted for a major share of this business. About 71% of the total absorption was contributed by IT/ ITeS firms, followed by BFSI 9%, pharma 7%, manufacturing 5%, engineering 4% and others 3%, the report said.

"About 1.5 million sq ft absorption was contributed by the top 5 deals. Vacancy rates fell on account of limited new supply in the market. As demand picks up in 2016, we expect upward pressure on rentals owing to decreasing space availability as there are very few completions happening. Also, very few projects are being started," said Amit Oberoi, head of research and national director at Colliers.

Among the micro markets, OMR with 45% of the market share remained the most preferred location. Central business districts, GST Road and Mount Poonamallee Road together accounted for about 42% of the market share and Ambattur accounted for 12%.

More than 1.8 million sq ft of office space leased out in 2015 was vacant for long. About 3.16 million sq ft of new office space was constructed last year, the report said. Much of the new supply was concentrated on OMR. About 38% of this was contributed by Chennai One SEZ.

Vacancy level in end-December 2015, was 5.8 million sq ft. About 56% of this is on OMR itself, followed by Ambattur 18%. Limited new construction and increase in absorption of space led to decrease in vacancy level from 19.5% in 2014 to 14% in 2015.

Source: PropertyatNeoDevelopers.Wordpress.Com

Office space absorption rises to 30 million sq ft till September; outlook looks bright: Colliers

Office space take-up by corporates in the first nine months of the 2015 calendar year rose to 30 million sq ft, 11% more than 27 million sq ft in the same period last year, according to a new report by property consultancy Colliers International.

The consultancy anticipates the momentum to continue in the coming quarters.

"With a number of deals at advance stages, we anticipate momentum in office market to continue. Cities like Bengaluru, Gurgaon and Mumbai is set to witness maximum office uptake in the coming quarter," said Surabhi Arora, associate director - research at Colliers India.

Corporates leased around 10.6 million sq ft of office space in the September quarter this year, a marginal rise from 10.5 million sq ft in the previous quarter.

Gurgaon marched ahead of Bengaluru and Mumbai in terms of office absorption, accounting for 23% of the total space absorbed across India in the September quarter, followed by Chennai at 20%, Bengaluru at 18%, Mumbai at 15%, Noida at 11%, Pune at 9%, Delhi at 4% and Kolkata grabbing 2% share.

Gurgaon witnessed an 18% QoQ rise in office absorption to 2.1 million sq ft in the September 2015 quarter, totaling to about 4.9 million sq ft till September this year, backed by demand from the IT/ITeS sector, which grabbed 60% share. The banking and financial services industry followed with 20%.

NH 8 (National Highway 8) remained the most preferred micro market in Gurgaon, sharing about 29% of total office absorption, followed by Golf Course Road 25% and Udyog Vihar 21%.

"Due to location advantages and affordable rents, micro markets like Udyog Vihar, institutional sectors and NH8 will continue to garner the occupiers' interest," Arora said.

Mumbai recorded a total of 5.95 million sq ft of office space absorbed till September this year, with about 1.4 million sq ft leased in the September quarter. Bandra Kurla Complex (BKC) remained the most preferred location with 32% of total office absorption, followed by Western Suburbs (Dadar, Goregaon, Andheri and Jogeshwari) at 28% and Central Mumbai (Worli, Dadar, Lower Parel) at 17%.

Bengaluru recorded 1.6 million sq ft of office absorption in the September quarter, taking the total to over 8 million sq ft in the first nine months this year. IT/ITeS companies leased 56% of the office space in the September quarter, followed by manufacturing at 16% and BFSI at 10%.

While cities like Chennai, Delhi and Noida recorded a rise in office absorption in the September quarter to 1.82 million sq ft, 0.33 million sq ft and 0.98 million sq ft, respectively, Pune and Kolkata witnessed a drop of 55% and 30% to 0.83 million sq ft and 0.2 million sq ft, respectively.

Source: PropertyatNeoDevelopers.Wordpress.Com

Office leasing down 15% in February; housing demand remains subdued

Office leasing fell 15 per cent while demand for ready housing properties remained subdued during February, according to property consultant CBRE.

"Transaction activity dipped by approximately 15 per cent over the previous month, with Bangalore accounting for almost 50 per cent of the overall space transacted," CBRE said in its monthly update.

Pune and Delhi-NCR also saw strong transaction activity (about 30 per cent of the total transacted space in leading cities) during February, it added.

Cities such as Bangalore, Hyderabad and Kolkata observed an increase in occupier demand in the month.

"Few large sized transactions (above 100,000 sq ft) were also concluded in Bangalore. Among the transactions concluded, Tech Mahindra committed around 140,000 sq ft in Goldhill Supreme, Walmart took up around 130,000 sq ft in Salarpuria Aura and RBS Business Services leased around 100,000 sq ft in RMZ Ecoworld," CBRE said.

This month also saw the renewal of existing leases (around 0.33 million sq ft) mostly from corporate occupiers, it added.

Absorption of office space increased by nearly 10 per cent in 2014 to over 33 million sq ft compared to previous year.

On housing market, CBRE said the "demand for ready residential properties remained subdued". The quantum of residential unit launches also remained low during the month.

Real estate market, especially housing, is facing a huge slowdown since last couple of years due to skyrocketing property prices and high interest rates.

"While the focus remained on the mid-end segment, the total number of launches declined due to abundant availability of ready-to-occupy inventory and cautious buyer sentiment," the consultant said.

Most of the housing projects were launched in Bangalore and Chennai in the mid-end and high-end segments (measuring 100-700 units), while other cities attracted limited new launches during the month, the report said.

"Capital values across most micro-markets in the leading cities largely remained stable due to prevalent low-end user demand and inventory build-up in most locations. Going forward, residential markets are likely to see stable price points with a gradual pick up in launches in most of the leading cities," CBRE said.

However, emerging and peripheral locations with a substantial supply pipeline might witness a slight price correction in forthcoming months, it added.

Source: PropertyatNeoDevelopers.Wordpress.Com

Got a startup plan? Know where to rent, invest

Gone are the days when being in a ‘Sarkari Naukri’ was the in thing. For a lot of ambitious 20 somethings, getting a ‘start-up’ tag on their resume is the focus.

With the Union Budget 2014-15 allocating Rs 10,000 crore fund to facilitate capital flow to start-ups, there has been a new enthusiasm not only among the working fraternity but the real estate trend watchers as well, who know that at lower entry costs the upcoming areas of Delhi NCR are in for many takers.

“A large proportion of the population feels it is better to live close to the metro station, so they move to affordable rental and capital destinations such as Chattarpur, Ghitorni or Mehrauli or even in the vicinity of Arjangarh Metro Station,” says Sagar Ratnani, broker at SR Properties.

Depending upon the nature of work - creative, distributor services, textile, retail, publishing and consultancy, there are a lot of choices and good connectivity is a must. “When I got into advertising, my small company of four heads needed an office boy for assistance. Clients sent small packages or received them from us. This meant we were constantly on the move and needed this expense to be economical. Consequently, we picked Chattarpur,” says Upasana Bilwaal.

Bilwaal further points out, “We opted for Chattarpur only because we are not a client facing company.” Other companies prioritize as chances of exposure, weight of a popular address and proximity to the clients’ offices. This way there is a better chance of getting ideas translated into business models.

Noida, Nehru Place, Udyog Vihar, Shahpur Jat, Kailash, Masjid Moth, Lajpat Nagar, Gurgaon, HUDA, Karol Bagh, Jhandewalan, Mehrauli, Netaji Subhash Place, Pitampura, Rohini, Laxmi Nagar, Shakarpur and Pandav Nagar are some of the popular and strategic locations due to the metro connectivity.

“Some areas like Dwarka or Atta in Noida are a strict no-no among start-ups,” informs Rohan, a techie by profession and proprietor, Start-up Shared Office Spaces, a discussion forum on Facebook. “While offices require a show value, affordable areas in the proximity serve as hot investible grounds for living,” says Ratnani.

For entrepreneurs, looking for an ecosystem to grow in, it is important to live close to work. Ratnani says, “Most upcoming locations are where startups want to set base. Indirapuram, Ghaziabad and some sectors of Noida with rents ranging between Rs 15,000-40,000 per month for commercial units. An increasingly large number of these young buyers are investing in 1 or 2BHK units around these upcoming locations. In the case of Gurgaon, well-to-do start-up founders can afford to live close to South City and Cyber City.”

Local realtors inform that most start-up professionals are late home buyers. They prefer to experiment with their job and see how well it pans out. Since the income might keep dwindling, the rental market is popular among them.

Source: PropertyatNeoDevelopers.Wordpress.Com

Office space leasing grows 11 percent in 2014

Office space leasing increased by 11 per cent last year to nearly 30 million sq ft in seven major cities on higher demand from corporates looking for expansion, according to real estate company Neo Developers Gurgaon.

These seven cities are - Delhi, Mumbai, Bangalore, Chennai, Pune, Hyderabad and Kolkata. "Close to 30 million sq ft of office space got absorbed in 2014, a 3.0 million sq ft jump in net absorption compared to the previous year," Neo Developers Gurgaon MD said.

Indian office market had the second best year ever (other than 2011) in terms of absorption and the lowest vacancy levels since late 2009, he said. Bengaluru recorded the highest office space absorption in 2014 at 9.39 million sq ft, followed by Mumbai at 5.46 million sq ft and Delhi-NCR at 5.38 million sq ft.

"Bengaluru witnessed a significant 72 per cent year-on-year increase in net absorption in 2014, followed by NCR-Delhi (48 per cent), Hyderabad (41 per cent) and Pune (13 per cent)," the report said. Leasing activities fell in Kolkata (-55 per cent), Chennai (-43 per cent) and Mumbai (-21 per cent).

"A reason for the drop in absorption in Mumbai and Chennai was the lack of availability of suitable office space in the preferred micro-markets," JLL said. Sectors that contributed the highest in terms of leasing were IT-ITeS (35 per cent), BFSI (17 per cent), manufacturing (13 per cent) and consulting business (6 per cent).

"US companies (44 per cent) continued to retain the dominant in share of office space leasing in India in 2014, although its share has decreased by 4 percentage points from the previous year," Neo said. Domestic companies have increased their share to 33 per cent from 31 per cent in the previous year.

Source: PropertyatNeoDevelopers.Wordpress.Com