The Hindu Business Line : Higher vacancy rates seen with large concentration of IT space supply: C&W

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Higher vacancy rates seen with large concentration of IT space supply: C&W

Rental values in most cities remain stable except NCR, Chennai & Kolkata.

“Unanimously peripheral locations, which have a higher concentration of IT and ITES supply, have recorded higher than average vacancy due to restrained activities from the sector.”

Our Bureau

New Delhi, Nov. 6 The slowdown in the IT and ITES sector continues to dampen the sentiments in the real estate office market.

According to Cushman & Wakefield’s latest report, the peripheral locations with large concentration of IT and BPO supply, recorded vacancy rates that were higher than the city average during the third quarter ended September 2008.

“In terms of vacancy levels, most micro-markets witnessed marginal increase in the third quarter this year.

“Unanimously peripheral locations, which have a higher concentration of IT and ITES supply, have recorded higher than average vacancy due to restrained activities from the sector,” the report from C&W said.

For instance, while in Kolkata the average vacancy levels were eight per cent in the third quarter, the IT/ITES prime locations of Salt Lake Sector V and Rajarhat recorded vacancy levels ranging from 10-12 per cent.

Similarly, the average vacancy in Bangalore city was 7-8 per cent, whereas Whitefield logged a higher than average vacancy level of 14 per cent.

In Chennai too, against the average city vacancy of 5-6 per cent, the vacancy in case of a peripheral location such as Rajiv Gandhi Salai saw a whopping 40 per cent vacancy.

In the National Capital Region, the overall vacancy hovered at 8-9 per cent, even as the vacancy in IT/ITES space in Noida was nearly 16 per cent.

Overall, the real estate market witnessed a total supply of 18.41 million sq. ft across eight major cities in the third quarter, with a total absorption at 9.21 million sq. ft.

The cities are – Ahmedabad, Bangalore, Chennai, Hyderabd, Kolkata, Mumbai, NCR and Pune.

Seen sequentially, the absorption rates overall have posted a 44 per cent increase over the previous quarter’s 6.36 million sq. ft.

However, this improved absorption has primarily been on account of pre-commitments that were delivered in the third quarter contributing 46 per cent to the total absorption.

The NCR witnessed the highest new supply infusion of about 5.04 million sq. ft followed by Pune, Bangalore and Chennai with 3.55 million sq. ft, 3.41 million sq. ft and 3.36 million sq. ft, respectively.

Mumbai witnessed an addition of 1.88 million sq. ft of supply, while Hyderabad and Kolkata recorded 930,000 sq. ft and 242,000 sq. ft of supply, respectively.

Rentals

Rental values across most cities remained stable with the exception of NCR, Chennai and Kolkata where a number of micro markets saw a drop in rentals.

Within NCR, the office rental fell one per cent quarter-on-quarter for Gurgaon (Commercial) and 14 per cent for Noida – IT/SEZ.

In Chennai, the decline in rental values ranged from four per cent (in off CBD area) to 13 per cent (in suburban location of Ambattur).

In Kolkata, locations such as Rajarhat and Salt Lake (Commercial) recorded decline of 10 per cent and 9 per cent, respectively, in their rental values compared to the second quarter.

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