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India’s office market witnessed an all time high annual absorption of over 43 million square feet in 2016, registering a growth of 9 per cent on a year on year basis.
Supply addition during the year touched 35 million square feet with office stock reaching a milestone of over 0.5 billion square feet (as of Q4 2016) - higher than several East Asian economies.
According to CBRE MarketView report, While Bangalore and Delhi NCR dominated office leasing on an annual basis (accounting for a share of about 47 per cent in the overall space take-up), however, both cities individually saw a marginal drop in leasing activity in 2016.
On the other hand, Mumbai and Hyderabad witnessed an increase in space take-up on an annual basis, accounting for a share of 14 per cent each in leasing activity in 2016. Hyderabad in particular, witnessed a steep rise in occupier demand, with absorption more than doubling to cross six million square feet during 2016.
“The commercial real estate market in India has been performing well for the past two years. This is evident in the record absorption levels witnessed in 2016. India continues to show positive movement, despite global uncertainties,” said Anshuman Magazine, Chairman –India and South East Asia, CBRE.
“Going forward policy initiatives undertaken by the government in the recent past is expected to bring transparency into the sector, which is a much needed step towards enhancing consumer and investor confidence,” he added.
Commercial activity and occupier demand is expected to remain steady in the coming months, backed by corporates looking to expand/consolidate operations. Regulatory clearances in key locations are also likely to boost leasing activity in the coming quarters.
“Occupier enquiries for medium to large sized office spaces are expected to be closed in forthcoming quarters, adding to the transaction momentum. Due to the limited availability of ready to move in Grade A supply, occupiers with medium and large size requirements will focus on pre-commitments in under construction /built-to-suit developments across key micro-markets in the leading cities in the country,” explained Ram Chandnani, Managing Director – Advisory and Transaction Services, CBRE South Asia.
“Occupiers, while expanding their footprint, are likely to keep a strong check on city infrastructure and focus on space utilisation ratios and innovation in workplace strategies,” he added.
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