Demand for office space to be slow

ITES and BFSI continue to be primary demand drivers of office space in India in 2012, says DTZ Occupier Perspective: India Office Demand Survey 2011. According to a statement from DTZ, Delhi NCR and Bangalore are the preferred IT/ITES destinations, while Mumbai is BFSI's favourite. Among the smaller towns and cities, information technology companies are looking at Bhubaneswar, Chandigarh and Jaipur, while the banking, financial services and insurance players prefer Ahmedabad. Gurgaon is a preferred micro market in Delhi NCR.

This is following a survey of office occupiers in India in late 2011. DTZ found that occupiers' sentiment has turned cautious, particularly after the latter half of 2011, due to the global economic uncertainty, and is likely to remain so in 2012 and 2013. The key highlights of the report are:

Companies are adopting a ‘wait-and-watch' policy, which will lead to a slowdown in expansion plans across industries, and thus moderate the market demand in 2012. The majority of demand in the first half of 2012 will be a spillover of work-in progress deals from 2011. The demand thereafter will be influenced by the economic scene in the domestic and overseas markets. Nearly half of the businesses have extended the likely horizon of their new office take-up to beyond 12 months, as they adopted a more cautious approach in the implementation of their expansion plans. Though potential occupiers indicate a need to reduce occupation cost, they aren't likely to compromise on the quality of office infrastructure. More than half of the occupiers indicate that they want to lease Grade ‘A' buildings only.

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