Mumbai: Office space absorption rose 46 per cent to over 10.2 million square feet in the second quarter of 2016 on improved demand from corporates, according to property consultant CBRE.
The NCR (Delhi, Gurgaon and Noida) and Bengaluru accounted for almost 50 per cent of the total space take-up in the April-June quarter.
“Despite a muted global economy, India continues to be a favoured outsourcing destination for corporate firms. Recent policy announcements by the government and a stable domestic economy are all expected to attract investments into the country’s real estate sector and enable the ease of doing business here,” CBRE South Asia chairman and MD Anshuman Magazine said.
The IT/ITeS (IT-enabled services) sector continued to be the largest demand driver for office space, recording over 50 per cent of the total leasing activity recorded in the quarter, followed by engineering and manufacturing firms and banking and financial services, CBRE stated in a report.
It noted that nearly 7 million square feet of fresh office space came into the market during this period. Hyderabad and Mumbai accounted for more than 65 per cent of the total supply of fresh office space across leading cities.
Mumbai witnessed a 21 per cent rise in office space absorption with 1.4 million square feet absorbed during the second quarter of 2016, and demand for office space largely concentrated across peripheral micro-markets.
The city had over 2 million square feet of new office space entering the market during the quarter.
Majority of office space demand in the city was led by corporate occupiers from the banking, financial services and insurance (BFSI) sector, followed by pharmaceuticals and engineering sectors.
More than 17 million square feet of corporate real estate was absorbed across the leading cities in the first half of 2016.
Suburban and peripheral office districts of major cities attracted steady occupier demand during the quarter and the micro-markets that dominated leasing activity across cities during the quarter were Whitefield and Electronic City in Bangalore; Sohna Road and DLF Cyber City in Gurgaon; CBD (Anna Salai, T Nagar, RK Salai, Alwarpet and Nungambakkam), OMR Zone 1 and Mount Ponnamalle Road in Chennai, and the IT Corridor in Hyderabad, Thane and Navi Mumbai, the report said.
The central business districts (CBDs) of several cities witnessed a change in rental values, with the exception of Delhi NCR, Mumbai and Hyderabad.
In the case of Bangalore, Chennai and Pune, the CBD rental values increased by about 2-6 per cent quarter-on-quarter due to sustained demand levels, while the Kolkata CBD witnessed a 4-6 per cent quarter-on-quarter rise in rentals.
With limited SEZ supply expected in the market, the segment witnessed 2-12 per cent quarter-on-quarter increase in rent across Chennai, Pune, Hyderabad and Kolkata.