Over 20 million sq. ft of office space was added to in major cities across India in the first six months of June 2013, according to the international property consultant C B Richard Ellis. A report by CBRE, India Office Market View for the second quarter of 2013, says office space supply in key Indian cities was 16 per cent higher year on year and eight per cent more on a quarter-on-quarter basis.

Around 10.8 million sq. ft was added to the market in the three months of April to June 2013, and 9.9 million sq. ft in January-March quarter 2013. Large commercial and SEZ developments were completed in Bangalore, Mumbai, National Capital Region and Pune.

During this period, just about 14 million sq.ft of office space was absorbed. This includes about 7 million sq.ft in the second quarter and 6.6 mn sq.ft. in the previous quarter.

Inventory crunch

Transaction activity in the second quarter was mostly in NCR, Mumbai, Bangalore and Pune, representing about 88 per cent of the total transacted space. Tenants concentrated on consolidation and efficient use of existing space. But office space in ideal continued to attract occupier interest. But transactions took longer to conclude.

Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia Pvt Ltd, said, “Despite a large supply infusion into the market, the prevailing global economic outlook continues to play a big part in expansion plans for corporates across the board. Cost reduction continues to be a primary concern and the overall mood in the leasing market remains cautious. I expect this sentiment to continue till the global as well as Indian economic situation improves.”

Supply pressures continued to dictate rental movement with a clear segregation of micro markets in terms of rental behaviour across leading cities.

Rents were either stable or appreciated marginally in demand driven micro-markets such as Connaught Place, Gurgaon, BandraKurla Complex, Lower Parel and Outer Ring Road. Rental sentiments in supply driven micro-markets such as Thane, Navi Mumbai, Powai and Vikhroli were on a downward trajectory. The India Office Market View is a quarterly report which provides a summary of office rents across key cities in India. It includes average rental rates for the coming quarter as well as an outlook for the next quarter. The India Office Market View report also covers Grade A office space rentals across the cities of NCR, Mumbai, Bangalore, Chennai, Hyderabad, Pune and Kolkata.

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