The global occupational levels in office market recovered from the downtrend seen in 2009 to positive growth in 2010.This has also caused rents to climb in an increasing number of countries,including India.
As economies start reviving globally,the demand for office space has picked up.India,where demand has gone up in almost all the markets,is no exception.Clearly,it has a bearing on rentals for office space,which have increased across the globe,according to the latest research of Cushman and Wakefield.
This is an indication that more jobs are being created,which will also create demand for residential units in the country,thereby providing a fillip to the Indian real estate sector.
According to the survey,the global occupational levels in office market recovered from the downtrend seen in 2009 to positive growth in 2010.Stronger demand resulting from an increase in business activity caused rents to climb in an increasing number of countries.The report says that India is an integral part of this growth story where rentals increased in the range of 5-15 % in major micromarkets across the leading commercial centres of India.
The Indian economy witnessed a real GDP growth of approximately 8.9% by the middle of 2010,which had a direct impact on the level of economic activity,and commensurately on the commercial office space market.India saw an increase of over 35% in demand (absorption + pre-commitments ) for commercial Grade A office space over the previous year with absorption making up over 90% over the total demand;pre-commitments in the same period increased by over 95%.
Arvind Nandan,executive director (occupier services) at Cushman & Wakefield,India,says: Indias strong fundamentals and a buoyant internal market ensured a speedy recovery.Besides,recovery and signs of growth in the global market further infuse confidence in the Indian market,fuelling demand for office space.
Arvind adds: Most markets have started to witness a growth in rental values for commercial spaces in 2010.This growth is expected to remain positive for a few quarters,though some caution would continue to be exercised by occupiers.This cautious approach will mean that rental-value growth pattern will gain pace,while in some locations,they may even hold steady.
The highest growth in rental values was recorded in Pune,which saw an increase of 22% at the end of 2010,over the previous year.Malad in Mumbai and the central business district in Bangalore recorded a growth of 13% in rental values in 2010 over 2009.
Pune saw a growth in demand as stability returned to the economy with many IT/ ITeS companies looking at securing office space in the city.Excellent infrastructure and connectivity,lower rental (compared to other IT/ITeS locations),were other factors that contributed to the rise in demand.Bangalore could maintain some growth,as traditionally,it is a location with high demand even during the slowdown with the quantum of demand remaining the highest in the location.Mumbais suburban location of Malad contributed greatly to the overall rise in rental values,which,due to lack of supply and high demand,recorded a considerable rise in rental values.
No further fall was seen in the NCR of Delhi,where rentals tanked by 20% in 2009.However,because of huge supply of office space in Gurgaon and Noida,rentals have also not increased;but,on the flip side,the vacancy rates have fallen substantially in 2010.In the global market,the recovery is led by the Asia-Pacific region where rents increased by 8% over the year.Hong Kong and Beijing saw huge jumps in rental growth of 51% and 48% respectively.
