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  • NewsFlash - India Office Market View - Q3, 2014

NewsFlash - India Office Market View - Q3, 2014

October 9, 2014
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Grade A office space take up witnesses approx 31% increase y-o-y

CBRE’s India Office Market View for Q3 2014 reports on the status of Grade A office space in the country’s leading cities. The third quarter observed strong demand for prime office space with around 8 million sq. ft. of office space getting absorbed. Absorption remained largely stable on a quarterly basis, while reporting an increase of around 31% on an annual comparison. New Grade A office space addition, meanwhile, fell by about 3% q-o-q across the leading cities, to stand at about 6.7 million sq. ft. in the third quarter of the year—helping to balance out the supply–demand dynamics across the country’s key corporate real estate locations.

The following are the key points from the report:

  • Transaction activity remained upbeat in Q3 2014 as corporate occupiers took up office space with greater velocity. The quarter saw numerous transaction closures towards the consolidation and expansion of corporate firms, with Bangalore, the National Capital Region (NCR) and Mumbai attracting around 72% of office space requirements during the third quarter. Chennai reported a strong quarterly growth of more than 50% in office space absorption, followed by Mumbai (~15%). This reflects a sustained improvement in leasing sentiments across most cities.
  • Fledgling e-Commerce segment new addition to demand drivers for office space across leading cities. Although the IT/ITeS sector continued to remain the main demand driver for commercial office space during the quarter, the e-Commerce segment was observed to be the newest addition to the usual mix of corporate real estate occupiers across the leading cities.

 

  •  Bangalore and Hyderabad attracted significant pre-commitments for under-construction properties from corporate firms in Q3 2014. Strong business sentiments continued to drive demand for investment-grade office space across Bangalore and Hyderabad, where limited availability of quality space—coupled with a strong preference for fresh Grade-A developments offering larger floor plates—encouraged corporate real estate occupiers to pre-lease spaces in select under-construction developments.
  • Rental values remained largely stable, with marginal appreciation in select markets. Rentals for commercial office space remained stable for the most part across cities such as Delhi NCR, Bangalore, Pune and Kolkata; while appreciating across select micro-markets of Chennai and Hyderabad. Sustained occupier interest in prominent SEZ developments of Chennai led to rental rates rising in the range of 12 15% during the quarter. Similar demand trends also led to rental appreciation in select developments along the IT Corridor in Hyderabad. Conversely, subdued demand levels and existing vacancy pressures caused values to dip by 2–3% q-o-q in Mumbai’s Nariman Point and Bandra–Kundra Complex.

Anshuman Magazine, Chairman and Managing Director of CBRE South Asia Pvt. Ltd., commented, “The demand for office space has improved this year, due to the improving economic situation globally and in India. With expected increase in the Indian GDP, the commercial real estate market will witness more activity in the coming months.”

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Disclaimer:

Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.
 

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.​

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