Demand for Office Spaces Jumped the most in 2015

If you just take a look at the real estate statistics of 2015, it makes it clear that office space absorption across the country jumped the most in 2015, and it seems all set to maintain the momentum in this year also. The market for residential properties may descend, but the commercial real estate is flying off the shelves.

Almost about 38 million sq. ft. of corporate space was absorbed in the top seven cities in India, which is the highest absorption till date according to CBRE, real estate services firm. Bengaluru stands first taking up the major share of 32% among the total office space absorption followed by Delhi NCR with 23% of share. The suburban and peripheral office districts also attracted a steady occupier demand in the last quarter of 2015.

Will commercial property growth feed into residential market?

• Experts believe that to happen; they strongly feel that the growth of commercial real estate will feed into the residential market. They also say that it’s a leading indicator of how the sales of residential properties might perform in future. According to them, the positive demand is an indicative of an improved economic sentiment.

• Anshuman Magazine, the chairman of CBRE South Asia says that, this demand for office space in India will create more jobs and also boosts confidence among home buyers. He feels that, the demand for office space will gradually bear a positive impact on residential real estate market.

• The growth will also be reflected in the stock market performance of realty developers with their saleable and leasable spaces. In 2015, the shares of Marathon Nextgen and Godrej Properties rose by 43% and 32% respectively. Brigade Enterprises also gained 2% while all other shares are witnessing the drop of 2-20%.

• The shares of companies having exposure to commercial property market in Bengaluru are expected to do well, as the vacancy level in the market is low and it is the right time for rental appreciation.

IT/ITes Firms snapping up office spaces

• The demand for office spaces is constantly growing as the IT/ITes, financial services, ecommerce companies and healthcare sectors are snapping up office spaces in all the major cities.

• The interesting thing is that, small and medium sized deals (less than 50,000 sq. ft. space) have accounted for 85% of transactions in 2015. This clearly indicates that the growth is not restricted to top corporates, but it’s widespread.

According to a research conducted by CBRE, the most prominent micro markets with good demand includes Gurgaon in NCR; Thane, Powai, Kanjurmarg, Vikhroli and Navi Mumbai in Mumbai Metropolitan Region; IT Corridor in Hyderabad; Outer Ring Road in Bengaluru; Old Mahabalipuram stretch in Chennai; Salt lake Sector in Kolkata and Viman Nagar in Pune.

This change in demand has made realty developers review their strategies and business plans. Be it on a lease basis or outright, the office spaces are clearly being picked for the expansion and future growth.