ITES and BFSI continue to be primary demand drivers of office space in India in 2012, says DTZ Occupier Perspective: India Office Demand and Trends Survey 2011. It says Delhi NCR and Bengaluru preferred by IT/ITES while Mumbai is BFSI’s favourite. Tier II cities of Bhubaneswar, Chandigarh and Jaipur preferred by IT/ITES; Ahmedabad by BFSI’s favourite; Gurgaon is the preferred micro market in Delhi NCR.
The DTZ study finds most corporates are adopting a ‘wait-and-watch’ policy, which will lead to a slowdown in expansion plans across industries and thus a more moderate overall take-up in 2012.
The majority of demand in the first half of 2012 will be a spill-over of work-in progress deals from 2011. The demand thereafter will be influenced by the Indian economic performance and outlook of global markets.
Nearly half of the occupiers have extended the likely horizon of their new office take-up to beyond 12 months, as they adopted a more cautious approach in the implementation of their expansion plans.
‘Expansion’ emerged as the key driver of demand in 2011-2012, followed by ‘Consolidation’ and ‘New markets coverage’.
Majority of the occupiers seeking new office space are planning to take up less than 25,000 sq ft. At the same time, there has been a significant increase in the demand for large spaces (of more than 100,000 sq ft) from the 2010 survey.
Though occupiers indicated willingness to cut occupation cost, they seemed highly unlikely to compromise on the quality of office infrastructure. More than half of the occupiers (58%) indicated that they want to lease Grade A buildings only.
The cautious outlook for office demand reflected on expected rental movements over the next six to 12 months, with majority of occupiers expecting rents to remain stable during this period.
DTZ conducted this survey to understand the needs and preferences of office occupiers, given that they are one of the most critical stakeholders of real estate. In total, 75 in-depth discussions were conducted during the last quarter of calendar year 2011 with senior executives from different industries including IT/ITES, BFSI, healthcare, manufacturing, media, infrastructure, aviation and telecommunication.
