NEW DELHI: Undeterred by the overall slowdown in the real estate sector, office space absorption across top cities touched an all-time high mark of 43 million square feet in 2016, registering a growth of 9% over 2015, according to a report by property consultancy CBRE.
Bangalore and the National Capital Region (NCR) dominated the leasing activity, grabbing 47% share. Mumbai and Hyderabad witnessed an increase in space take-up, accounting for a share of 14% each in leasing activity in 2016.
Hyderabad witnessed a steep rise in occupier demand, with absorption more than doubling to cross 6 million sq ft during 2016.
Around 35 million sq ft of new office space was added in 2016, taking the India’s total office stock to over 0.5 billion sq ft till 2016 end. Mumbai and Bangalore accounted for almost half of the annual supply addition.
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, according to Anshuman Magazine, chairman –India & South East Asia, CBRE.
“India continues to show positive movement, despite global uncertainties. 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.
On a quarterly basis, office demand touched about 13.9 million sq ft during the last quarter of 2016, registering a 20% growth over the September quarter, on sustained occupier interest. Leasing during the quarter was mainly led by Bangalore and Delhi NCR, accounting for more than 50% of the total traction, followed by Pune and Mumbai.
IT/ITeS firms continue to lead office transaction activity; account for about 50% of the transaction activity during the last quarter. Other sectors such as engineering and manufacturing, BFSI and research and consulting were also significant contributors, collectively accounting for about 28% of the quarterly leasing activity.
Small to medium sized transactions of sizes under 50,000 sq ft remained the preferred format of occupation for companies.
Leasing activity in the December quarter was mainly concentrated in key micro-markets of most leading cities; prominent locations being Gurgaon in Delhi-NCR; Airoli, Malad, Goregaon, Vikroli and Thane/Navi Mumbai in Mumbai; Outer Ring Road, Whitefield and Electronic City in Bangalore; Raidurg and Madhapur (IT Corridor) in Hyderabad; the Old Mahabalipuram Road (OMR) stretch along Perungudi, Sholinganallur and Thoraipakkam in Chennai; Hinjewadi, Kharadi, Baner and Yerawada in Pune; and Salt Lake Sector V and Rajarhat in Kolkata.