Investment-grade office space take up of more than 9 mn sq.ft. highest in 3 years
India Office Market View for Q4 2014reports
on the status of Grade A office space across the country’s leading cities.
Total commercial office space take up in the fourth quarter of 2014 stood at
more than 9 million sq. ft.—the highest quarterly levels over the past three
years. Corporate real estate absorption rates rose by approximately 20% on a
quarterly basis; while overall take-up of office space in the entire year 2014
rose by approximately 10% on an annual comparison. Meanwhile, about 8 million
sq. ft. of fresh investment-grade office space was completed across key cities
during the quarter, indicating a quarter-on-quarter (q-o-q) growth of about 7%.
Overall development completions reported during the year 2014, however,
witnessed a decline of nearly 9% y-o-y. With transaction activity overtaking
new space addition, vacancy levels dipped across most leading office markets by
the end of 2014.
The following are the
key points from the report:
Assisted by strong demand from corporate
occupiers and improved transaction levels; at nearly 5 million sq. ft., Bangalore
saw highest office space take up in the fourth quarter. The office market reported signs of improvement in
Q4 2014, with enhanced traction from corporate occupiers. Bangalore led the
momentum with an overall share of more than 50% of the total leased space in the
quarter, followed by the National Capital Region (NCR) (20%). Bangalore and
Hyderabad also saw the highest q-o-q increase in absorption levels.
More than 90% of total corporate space
take up in Q4 2014 was for back office requirements or a combination of back-end
and front-end operations of various corporate firms. Back office operations
continued to be the prominent demand driver for corporate real estate across
leading cities in the fourth quarter. During the period SEZ developments across
Gurgaon, Bangalore, Hyderabad, Pune and Chennai also saw considerable traction,
largely led by IT/ ITeS and tele-communication majors.
New office supply witnessed a marginal increase
in the quarter. Delhi NCR led
project completions, followed by Bangalore and Mumbai — together contributing
to around 70% of the total office space addition in Q4 2014.
Rentals rose in select IT developments
across the country. Rental values appreciated
in select micro-markets of Mumbai, Bangalore, Chennai and Pune, while remaining
largely stable across the NCR and Hyderabad. Sustained occupier interest in
prominent IT developments led to locations such as Malad/ Goregaon (Mumbai), the
Outer Ring Road (Bangalore) and North Bangalore observing a rental rise in the
range of 5–6% during the quarter. Conversely, subdued demand levels led to a
q-o-q rental decline (8–9%) in select commercial developments of Kolkata’s
Central Business District.
Anshuman Magazine, Chairman and
Managing Director of CBRE South Asia Pvt. Ltd., commented:
“India’s office market has witnessed a
gradual improvement during 2014 with overall sentiment amongst corporate
occupiers being positive. The fundamentals are in place for the global economy
to move ahead in 2015. There are signs of business conditions turning the
corner and I anticipate better news ahead for India’s realty sector.”
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.