After several quarters of tepid growth, the office space absorption has grown 23 per cent in 2010, while the rentals in the micro markets grew by 15 per cent as the overall demand for commercial space increased due to better macro economic indicators.
The total commercial space absorption grew to 32.65 million sq ft from the last year’s absorption of 27 million sq ft in the major Indian cities, according to the annual report by real estate consultants, Cushman & Wakefield.
Most micro markets in the country witnessed about 5 –15 per cent rental appreciation over last year, but currently rentals have stabilised across locations. However, select location in Hyderabad and national capital region (NCR) have seen rental growing at a slower pace.
In Mumbai, the moderation in demand led to stabilization in rental values which otherwise witnessed an annual appreciation of 5-10 per cent. Rentals in Bangalore recorded an annual appreciation in the range of 5-16 per cent, while the NCR rentals grew in the range of just 2 – 10 per cent over the year across most of the micro markets.
Fresh absorption formed a significant contributor to the overall yearly consumption numbers accounting for 91 per cent or about 30 million sq ft. The Indian IT capital Bangalore continued to witness the highest space take up in the country with 9.9 million sq ft, while Hyderabad grew 96 per cent over last year followed by national capital region (NCR), which grew 42 per cent over last year.
However, office space supply in 2010 fell 17 per cent to 43 million sq ft due to the cautious approach adopted by developers in order to control the high vacancy of approximately 20 per cent in the market.
“The pre commitments are back and it is a healthy indication of the revival of the office markets. This also signifies that the corporate sector has been actively planning their expansion strategies, which were deferred earlier due to the unfavourable economic environment.
There is also a shift in demand for space in SEZ developments where major pre commitments have been recorded,” Arvind Nandan, executive director, Occupier Services, Cushman & Wakefield India said.
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