The second quarter of 2015 has started on a good note with office space absorption rising 70 per cent quarter on quarter to more than 8 million sq ft on the back of improved market sentiments, according to real estate consultancy firm CBRE.
CBRE’s India Office Market View reports on the status of Grade-A office space across the country’s leading cities quarterly.
The first quarter of the year had started on a slow note with total office space take up at around 5 million sq ft, registering a decline of 22 per cent year-on-year and 50 per cent quarter-on-quarter, the agency had said.
In Q2, the Silicon Valley of India has continued to be the top corporate destination with roughly 35 per cent of the absorption emanating from Bangalore. Office space demand in Delhi NCR, Mumbai and Chennai also remained upbeat and contributed 53 per cent of the overall absorption.
The agency noted that e-commerce has emerged as one of the key occupiers of office space in India, particularly in the National Capital Region (NCR) and Bangalore. It contributed roughly 17 per cent to the demand pushing BFSI to third position with 16 per cent absorption. IT/ITeS remained the top demand driver with approximately 36 per cent share in the transactions.
Anshuman Magazine, chairman and managing director, CBRE, South Asia Pvt. Ltd. said, “Following a subdued first quarter, which is usually a period when corporates plan for annual real estate requirements, the second quarter witnessed a rise in office space absorption. A number of blue-chip tenants moved into quality office developments across leading cities in the April–June period.”
Overall, improved macro-economic sentiments during the first half of the year led to increasing demand for office space from corporate real estate occupiers. We expect these positive market sentiments to continue for the rest of the year, he added.
As for supply, close to 9 million sq. ft. of fresh investment-grade office space was completed across key cities during the quarter, registering a quarter on quarter increase of around 6 per cent. Bangalore topped on office space addition front too, supplying more than half of new stock.
Mumbai and Hyderabad also saw an increase in new project completions and accounted for a share of nearly 39 per cent of the total supply. Cautious market sentiments in Chennai, Pune and Kolkata, however, restricted development completions, as the delivery of several projects got delayed.
Delhi NCR was the only market that did not see any new completions during the quarter, it said.