Track2Realty: The estimated demand for office space across the top eight Indian cities in the period of 2013 – 2017 is expected to be 132 million square feet (msf), says a report by Cushman & Wakefield. Office space absorption in top eight cities is expected to be approximately 22.5 msf in 2013 which will be a decline of approximately 26% over 2012.
This is largely due to the current economic slowdown which has made many companies defer their leasing requirements. However, going forward the trend in absorption is expected to pick up at a steady pace with 2015 with an expected absorption of 28 msf.
Bengaluru ranks the highest in total expected net absorption which is estimated to be approximately 32 msf between 2013–2017 followed by Mumbai (24 msf) and NCR (23 msf). Pune (ranked 4th) and Hyderabad (ranked 5th) are expected to record absorptions of approximately 14 msf each while Chennai (ranked 6th) will see an absorption of approximlatey 11 msf. Kolkata (ranked 7th) and Ahmedabad (ranked 8th) finished the survey with 7 msf and 3 msf of total absorption respectively.
Sanjay Dutt, Executive Managing Director, South Asia, Cushman & Wakefield says, “The office market is expected to remain attractive for occupiers with steady increase in absorption after a trend of decline in 2013. With the economy expecting more stability in the post election phase from 2015, the absorption trend is also expected to pick pace especially in established markets of Bengaluru, Mumbai and NCR. We expect growth to set in from the second half of 2014 when an increase in leasing activities both on account of entry of new companies into the country, expansion of existing companies and indeed relocation and consolidation activities that are expected to continue.”
The supply of new office space for the same period (2013 – 17) is expected to be approximately 143 msf. of which approximately 90 msf is currently under various stages construction expected to get completed by 2015.
The commercial office sector has seen substantial deferment of supply in the recent times due to slack in demand and delays in regulatory clearances and a similar trend is expected to continue in the next few years owing to issues such as demand from occupiers as well as funding issues that developers have been facing.
