The current uptrend in the economy has finally started reflecting on the demand for commercial real estate in the country. In turn, the increase in demand for office space will also soon start reflecting in the sale of residential real estate too. According to a report on Indian office market by CB Richard Ellis, a global realty consultancy firm, the first quarter of 2011 saw a 20% increase (almost 6 million sq ft) in the demand for office space across key markets in the country vis-a-vis the same period last year. The National Capital Region (NCR) of Delhi accounted for 27% (more than 1.6 million sq ft) of the total space absorbed in the country.
Anshuman Magazine,the managing director of CB Richards Ellis , says: "The office market across India continues to grow. With corporates renewing their expansion plans across most industry sectors, demand levels and transaction velocity are expected to remain buoyant in the near to midterm. However,with significant supply in the market, rentals are expected to remain under pressure except for Grade A office space in a few key micromarkets."
The good news for the end users is that despite rise in demand, the rentals have not gone up due to good supply of the quality space in the region. "While demand levels have been positive, the large supply pipeline and ready availability of quality space has negated any undue price enhancement ," the report says.In some micromarkets , high vacancy levels could contribute to development of some downward pressure on values in the short to medium term. Values in the Central Business District (CBD) locations in Delhi, Pune, Kolkata and Hyderabad remained stable, while those in Bangalore and Chennai witnessed enhancement. The report says that the Indian office market is expected to continue to grow with new opportunities offered by corporate expansion plans across most industry sectors.
Both demand levels and transaction velocity are expected to remain buoyant in the near to midterm.
The CBD of Connaught Place and surrounding locations witnessed increased interest from prospective tenants in the first quarter of 2011. Similar to the previous few quarters, there was no supply to the CBD in the first quarter. Looking at the general scarcity of new supply, a few Grade B buildings have initiated refurbishment initiatives in order to upgrade their facilities and attract occupiers.
Gurgaon witnessed an addition of around 0.85 million sq ft of fresh IT space and approximately 0.47 million sq ft of non-IT space. Transaction activity continued to be relatively higher than other micromarkets with absorption recorded at around 0.75 million sq ft in IT/ITeS and another 0.12 million sq ft in the non-IT segments.Increased transaction activity and rising occupier focus on
SEZ developments led to an increase in rental values by almost 7-8 %, q-o-q basis.
Office leasing activity in Noida remained low compared to the previous quarter.An increasing occupier interest in SEZ projects along the Noida-Greater Noida expressway is likely to give a push to the transaction activity in the near term.
Source : economictimes.indiatimes.com