The off-take of office space in Mumbai dropped 23 per cent to 0.96 million square feet (1.23 million square feet) in Q2 of FY13, according to global consultancy firm Knight Frank.
Compared with the preceding quarter, the fall was 19 per cent as off-take in Q1 FY13 was 1.17 million square feet (sq ft). The decrease of absorption is attributed to a sluggish economic environment.
The BFSI sector has been the primary driver and it accounted for about 0.36 million sq ft in the reporting quarter.
The market share of the other service sector companies such as media, telecom, consulting and logistics almost halved to about 0.18 millon sq ft.
The IT/ ITeS sector, which maintained a steady market share over the trailing three quarters, accounted for 0.18 million sq ft in Q2. However, worries over an uncertain global economy and the looming threat of sanctions being imposed against outsourcing hampered expansion. The manufacturing sector gained significant ground in the preceding three quarters as its share has grown from 14 per cent in Q2 FY12 to 26 per cent in Q2 FY13.
Over a third of the transaction activity in the quarter took place in the Central Mumbai locations. Lower Parel accounted for about 75 per cent of the transactions in the micro-market. Andheri and Goregaon were the hot spots along the western suburbs.
Samantak Das, Director Research and Advisory Services, Knight Frank, said the offtake would continue to be muted over the next four quarters as the market bottoms out. Corporate expansion, especially in the IT/ITeS sector was expected to be subdued in the coming quarters following Nasscom’s revision of the growth estimates for the sector at 11 per cent.
Supply should continue to outstrip demand thereby ensuring that rental growth is restricted, the report added. The alternate business district would continue to attract market players as the central business district slowly loses its sheen. The Central Government’s focus on the manufacturing sector’s growth would likely see its appetite for office space trend upward.