Office space leasing drops 7% in 2017 to 30.57 mn sq ft: C&W report

The total supply also dropped by 11% this year

Despite a global economic slowdown, the country's commercial real estate saw a net absorption of nearly 30.57 million sq ft of office space in top eight cities in 2017 indicating growing investor confidence in India's growth story, according to a survey.

According to the survey by Cushman & Wakefield, the net absorption of office space in 2017 dropped by seven per cent to 30.57 million sq ft as compared to 32.85 million sqft last year.

The total supply also dropped by 11 per cent this year to 32.20 million sq ft as against 36.34 million sq ft in 2016.

"Office leasing trends have been positive in the second half of 2017 as global and national uncertainties settled. By the second half, it was clear that impact of events such as Brexit, US Fed rates revisions, GST implementations and RERA, were going to be minimum on growth of the commercial real estate sector of the country," Cushman & Wakefield country head and MD, India Anshul Jain said.

Even while the GDP growth showed a drop in the mid-quarters, the outlook for India's GDP growth is positive, giving a further boost to corporates to carry on with their growth plans, he added.

More than 50 large leasing transactions which were over 100,000 sq ft each, constituting over 11.5 million sq ft, in 2017, showing a healthy trend of growth in the corporations.

"The trend of large deals has been gathering steam as many companies are in rapid expansion mode. They are seeing a strong long-term potential in India's growth story," the report said.

Cities like Chennai, Pune and Mumbai recorded a growth of 38 per cent, 18 per cent and nine per cent, respectively, in the leasing activity, while Bengaluru witnesses a decline of nearly 30 per cent as compared to 2016 mainly due to low supply.

Kolkata, on the other hand, recorded the highest growth in incremental supply growing at 180 per cent, adding 2.7 million sq ft to its current stock in the year. Coupled with low rents, Kolkata offers interesting opportunities to occupiers for expansion, it said.

Hyderabad witnessed over 10 large deals concluded in 2017, with one of them being over 1.4 million sq ft leased by a global consulting services major, the report said.

"India's focus on creating an attractive and lucrative business environment has created significant impact. With its rise in position in 'ease of doing business', investor confidence is set to grow," Jain said.

He further noted that with various strategic government programmes such as 'Make in India' and 'Start Up India', there is a clear focus on long-term stability of the Indian economy.

"We expect these positive developments to create a very strong base for office space growth in the next 2 3 years," Jain added.