SEZ Space Accounts for 22% of the Total Office Stock in India: CBRE Report

Special economic zone accounts for about 22% of the total office stock in India across seven leading cities with Bangalore, Chennai, Delhi-NCR and Hyderabad housing almost 77% of this SEZ stock Overall.

The technology sector dominated SEZ space take-up with over 60% space absorption in the past three years.

Anshuman Magazine, Chairman, India and South East Asia, CBRE, said: “We feel that the space take-up in SEZs should remain strong till the end of 2019. We also expect that at least till the end of 2019, there will be a continuity in several trends in the SEZ segment of the commercial real estate market with growing preference for SEZ spaces by corporate, particularly those belonging to sectors such as technology, research and consulting, engineering and manufacturing, banking and financial services.”

On the supply pipeline, more than 20% of the upcoming office supply lined up for completion over the next two years is expected to consist of SEZ developments.

According to the findings over 80% of this supply, a pipeline is expected to come up in markets including Bangalore, Hyderabad, Delhi-NCR and Chennai.

The government in 2015 laid a roadmap to successfully reduce corporate tax from 30% to 25% by 2019. This also included announcing a sunset date on tax exemptions granted to SEZ developers and unitholders.

Abhinav Joshi, Head of Research, CBRE India, said, “Despite the sunset clause, corporate have been leasing space in prominent SEZs across leading cities. Firms belonging to the technology sector have had a share of almost 60% in the overall leasing in SEZ space from 2015 – H1 2018. We feel this activity will remain strong at least till the end of 2019, post which there could be a rationalization in demand.”

However, despite the sunset clause, the availability of quality office spaces offering large floor plates and options for further scalability in SEZ will continue to be an attractive factor for corporate, the report said.


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