India to add 40 mn sq ft office space in 2009

With the economy regaining its momentum slowly, India will add up to 40 million sq ft of office space this year, which will be higher than many other advanced countries, but lesser than China.

"Despite the slowdown, India will add highest ever office spaces this year. We will see 30-40 million sq ft of office space coming up in 2009," global real estate consultant firm CB Richard Ellis Chairman and Managing Director (South Asia) Anshuman Magazine said.

The addition of office space will be more compared to many other advanced countries, except China, he added.

Magazine, however, said demand has not picked up yet and the huge supply would lead to correction in rentals.

"Prices can further fall in certain pockets depending on how much supply these places can absorb. In other places, prices have almost stagnated," Magazine said, adding that some locations in Bangalore are likely to see decrease in rentals.

"After 2-3 years when supply will decrease and demand will increase, probably then we will reach at a stage of equilibrium," replied Magazine when asked about the time by which office-space rentals could stabilise.

Although office-space demand has increased in the first two quarters in 2009, Magazine said it would take time for "actual demand to pick up".

"IT companies are responsible for 80 per cent of the total demand for office locations and these were the most impacted firms during the recession... But next year supply will dip by atleast 20 per cent," he added.

Of the total anticipated supply this year, Mumbai, Bangalore and the National Capital Region will house most of the spaces.

"Chennai, Hyderabad, Kolkata and Ahmedabad will also see considerable addition of office spaces," Magazine said.