By: Anshuman Magazine, CMD, CBRE South Asia
Track2Realty: Enhanced levels of activity in corporate real estate transactions led to a total office space take-up of more than 33 million sq. ft.during 2014. This activity was led for the most part by Bangalore(37%) and the National Capital Region (NCR)(24%).
Total corporate space take-up in the fourth quarter of 2014 was more than 9 million sq. ft.—the highest quarterly levels over the past three years. Such transaction levels echoed the overall sense of optimism that prevailed in the Indian commercial real estate market in 2014.
The demand for commercial office space remained sustained throughout the year; and year-on-year space take-up increased by around 10% over 2013. The year also saw significant investor interest in completed and well-leased core commercial assets and IT parks. This willingness to invest in the country—especially on the part of multi-national organizations—indicates an increased confidence in the India growth story in general and the government in particular.
Except for Mumbai and Hyderabad, all leading cities witnessed an increased demand foroffice space during 2014 from corporate occupiers. While a rationalized supply and increased focus on committing space in under-construction projects in Mumbailed to a drop in transaction activity; a subdued political climate in Hyderabad during the first half of 2014 contributed to a similar drop.
Owing to available quality office developments with larger floor plates, occupier preferencesremained focused on the dominant office districts of Gurgaon, Thane/Navi Mumbai, Whitefield (Bangalore), Magarpatta (Pune) and the IT Corridor in Hyderabad, among others.
Among the leading sectors dominating office space requirements during the year, the IT/ITeS sector continued to account for a major portion, followed by banking/financial services. Other prominent sectors includedmanufacturing and engineering, telecommunications, construction, consulting and research, healthcare and pharmaceuticals. Additionally, cities such as Delhi and Bangalore attracted a healthy demand from the e-commerce segmentduring the fourth quarter.
Outlook: 2015
The fundamentals are in place for the global economy tomove ahead in 2015.There are signs of business conditions turning the corner and better news is anticipated ahead for India’s realty sector. The factors most likely to further impact the real estate market positively are stronger GDP growth; more relevant reforms; and the paring of interest rates.
The outlook for capital markets in the sector continues to look affirmative and transaction activity is expected to improve in forthcoming quarters. With the government’s reform agenda beginning to build momentum, India’s economy is likely to start 2015 on a brighter note than it did the previous year.
