Top 8 cities record 12.5 million sq ft office absorption in H1 2017: Report

Top eight property markets across India have recorded total net absorption of 12.5 million sq ft during the first half of 2017, down 11% from a year ago. Of the total net absorption between January and June, over nearly 57% was recorded in the second quarter of 2017, showed a Cushman & Wakefield report.

Chennai was the only market among these cities to register a year-on-year growth of over 110% in the first half of 2017. All other cities registered an on-year decline in net absorption during the period due to a slow start in the first quarter ending March.

Tapering supply has largely been responsible for the slowdown of net absorption in 2017, though there are some active enquiries by occupiers for consolidation/relocation of their office spaces hinting towards a healthy leasing activity by end of the year, the report added.

“Leasing activity has gathered pace in the second quarter owing to large transactions by IT-BPM and BFSI occupiers. Despite headwinds and cautious stance by IT-BPM occupiers, the IT-BPM sector continues to be the primary demand driver,” said Anshul Jain, Managing Director, India, Cushman & Wakefield. “Limited availability of quality supply has encouraged occupiers to pre-commit office spaces resulting in a significant increase of about three times in such activity; primarily driven by IT-BPM and healthcare sectors in Hyderabad, Gurgaon and Bengaluru.”

Supply for the first half of the year recorded a decline of nearly 50% as compared to last year with almost all markets experiencing a slowdown. Total supply was recorded at approximately 10 million sq ft in the first half of 2017. Chennai being again the only exception to this saw an increased supply of 32% from a year ago. This lack of supply has been a critical reason for the slowdown in uptake of space in the first half of 2017.

“As the dust settles on the geo- political and economic upheavals across the world along with some ground changes such as increased supply of office space, we are expected to see a healthy net absorption of close 32 – 35 msf by end of the year. Further with pre-commitments of close to 6 million sq ft, we can expect the momentum of absorption to continue,” Jain added.

 (source by:-The Economic Times)

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