Office markets in India registered a downward trend in absorption in the first half of the year (January-June 2013).

The total net absorption across top eight cities in the first half of 2013 was noted at 10.9 million square feet which denoted a decline of 15 per cent compared to the same period last year. 

According to a report by real estate Cushman & Wakefield, slower economic growth led to the decline in expansion by companies as cautious sentiments continued since the beginning of the year. While the skepticism was very apparent in the first quarter of the year, the second quarter saw a marked improvement in total office space absorption.

During H1 2013, Mumbai recorded the highest net absorption of 2.4 msf, which however was lower by 10 per cent compared to the same period last year. Bangalore and Pune followed Mumbai at 1.8 msf and 1.7 msf, respectively. 

Although, Bangalore saw a decline of 22 per cent in net absorption compared to the previous year, it however, witnessed a seven-fold increase in absorption in Q2 2013 compared to last quarter. Chennai and Pune recorded positive growth in net absorption in H1 2013 by 6 per cent and 37 per cent, respectively.  

Kolkata was down 52 per cent, while NCR declined by 42 per cent followed by Ahmedabad at 21 per cent registering the highest decline in absorption which were recorded at 0.49 msf, 1.42 msf and 0.27 msf, respectively.

Similarly, fresh supply also declined by three per cent and was recorded at 17.6 msf. Vacancy rates at the end of Q2 2013 were noted at 19.6 per cent, an increase of 1.7 percentage points over the same period last year.

Net absorption refers to the new leasing activity within the city and includes only the incremental new space take-up in instances of relocations and expansion from within the city. It does not include lease renewals and relocations to office spaces that have the same areas.

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