56% of the office space was leased by IT firms, other sectors like financial services, banking, engineering, and manufacturing and ecommerce companies contributed about 29% to the leased spaces in 2015.
According to CBRE, a property advisory firm, top seven cities in India have seen a record office space leasing of 38 million square feet in the year 2015, and this showed a great improvement in the sentiment among the domestic and foreign companies. The figure of 38 million sq. ft. represented about 18% increase over that in 2014.
CBRE said in a report that, the demand for office space in 2015 was led by Bengaluru with the share of about 32%, out of total absorption. This was followed by Delhi – NCR, with the share of 23%. But the demand in the last quarter of the year grew by 26% over that in the previous quarter. The suburban and peripheral districts of the major cities attracted a steady occupier demand between October-December 2015.
Year-on-year Increase in Occupier Demand
While most of the cities in India witnessed year-on-year increase in occupier demand, Kolkata was not a part of it. This was because of the delayed project completions which made corporate firms postpone their decisions of occupying the space.
According to India office Market View, a CBRE’s report for the fourth quarter of 2015, the absorption of Grade A office spaces in top seven cities witnessed a growth of about 26% in the period of October- December (over 12 million square feet). The seven top cities include Bengaluru, Mumbai, Hyderabad, Chennai, Kolkata, Delhi and Pune.
The report also mentioned that, prominent micro-markets are Gurgaon in Delhi NCR; Vikhroli, Powai, Thane and Kanjurmarg in Mumbai; Outer Ring Road in Bengaluru; Old Mahabalipuram stretch in Chennai, IT Corridor in Hyderabad and Salt Lake Sector V in Kolkata.
Anshuman Magazine, the managing director of CBRE says that India has become a favourite outsourcing destination for multinationals that outsource their operations to major cities in India. He also says that this is also a reason for a sustained spurt in office transaction activity.
This demand along with the positive market sentiment and macroeconomic climate has encouraged the corporate office occupiers in 2015. While 56% of the office space was leased by IT firms, other sectors like financial services, banking, engineering, and manufacturing and ecommerce companies contributed about 29% to the leased spaces in 2015.
This amazing performance of 2015 might be followed by relatively lower absorption in 2016, where the country is expected to witness the absorption of about 31 million square feet. However, 2016 will not see much of a drop off because of the strong economic fundamentals.
Decline in Office Property Sale across the Globe in the First few months of 2016
Annual capital appreciation is expected to slow down by 4% in 2016. While Sydney and Tokyo top the performance ranks in Asia Pacific, Los Angeles, Boston, Chicago and San Francisco are projected to outperform in America.
Commercial Real Estate to Be the Best Bet for Investors in India
Experts say that commercial real estate is definitely a best bet for the investors, as the assets seem to be available at the attractive valuations with the background of falling interest rates.
Bangalore Realtors Don’t seem to be Happy after the Rise in Guidance Values
Bengaluru is still a great place for those who would want to invest on real estate. But state government should consider taking necessary steps to generate revenue instead of increasing the property tax percentage.
