India accounts for half of Asia's office leasing in Q3'15

Delhi was most active market with a number of large transactions

India accounted for half of Asia’s total office leasing in the third quarter of 2015, said a new study.

Delhi was the most active market with a number of large transactions, and substantial increases were seen in Mumbai as well as Bengaluru, said property consultant JLL’s Global Market Perspective (Q4, 2015).

“Overall, leasing activity continued to improve in Q3, with Asia Pacific gross leasing volumes rising substantially by 27 per cent year-on-year, following a solid Q2. The most active sectors across the region in the quarter were domestic financial institutions and technology firms. However, the improvement was inconsistent,” said Anuj Puri, chairman, JLL India.

 

While the country’s strong performance was matched by China that recorded a buoyant demand in Q3, leasing fell by 23 per cent year-on-year in Australia as the robust pre-commitment activity of prior quarters tailed off. Similarly, Tokyo and Singapore saw a net reduction in occupation in Q3, JLL said.
 
Office leasing volumes for the full-year 2015 in Asia Pacific are predicted to be 25 per cent higher than 2014, with Tier-I cities in China (particularly Shanghai) and India likely to continue to see the strongest activity. A further five-10 per cent growth in Asia Pacific leasing volumes is projected for 2016, assuming China’s economy does not slow more abruptly than expected, it added.

 
In general, the investment market in Asia Pacific remains lively with strong interest shown by cross-border Asian investors and global funds. More portfolio and platform transactions are being completed, as investors look to gain access to stock that is difficult to acquire directly. Investment volumes in Q3 2015 are in line with JLL expectations and year-to-date Asia Pacific volumes account for 63 per cent of our original $140 billion (Rs 9.36 lakh crore) full-year forecast.

India’s transaction volumes almost doubled from the previous quarter to $1 billion (about Rs 6,684.9 crore) in Q3, with ample interest from equity funds as they look to take advantage of the attractive demographic trends and anticipated long-term growth potential.

“Investors have now become more selective and prefer core stabilised assets in the office and retail sectors. It is expected that increasing investor demand across all sectors will continue to be constrained by a lack of available high-quality stock,” Puri said.

Corporate occupiers remain in expansion mode in the majority of global commercial centres. Corporate growth continues to drive strong demand for real estate in established hubs such as London, New York and Sydney, in addition to more emerging centres such as Shanghai, Delhi and Bengaluru, JLL said.
 
Asia Pacific stock additions in Q3 were up 38 per cent year-on-year to 1.2 million square metres, with 38 per cent of the total in India, 22 per cent in Australia and 18 per cent in China. Full-year 2015 new deliveries are likely to reach 5.7 million square metres, a jump of 70 per cent year-on-year due to high activity in China and India. Another 6.1 million square metres is projected to be delivered in 2016, thereafter declining to 4.5–5.0 million square metres per year in 2017-2018.