Office space supply rises threefold in Ahmedabad: Study
Even while it witnessed a record threefold increase in office space supply from 0.5 million sq ft in 2011 to 1.3 million sq ft in 2012 (YTD), Ahmedabad is expected to see a further uptake in the segment, says the latest report by real estate consulting DTZ.
"The transaction activity in the city has been driven by banking, telecom and pharmaceuticals companies coupled with expansion by several local businesses. Owing to increase in demand and improvement in enquiry levels from prospective tenants, major micro markets like S.G. Highway and C G Road recorded some marginal rental appreciation of 6 per cent and 3 per cent, respectively. As a result, the city witnessed approximately threefold increase in supply, recorded at 1.3 million sq ft in 2012 (YTD) as compared to 0.5 million sq ft in 2011," the report stated.
Ahmedabad office space take-up, which had largely been restrained in 2010-2011, registered some significant improvement in in 2012. Take-up levels in 2012 (YTD) witnessed a 52 per cent increase as compared to 2011.
Highlighting about the outlook for the city, the report state that owing to favorable investment policies by the state government, several corporate are expected to begin operations in the state while many existing companies are actively exploring expansion plans.
"With several industrial developments currently underway, the city is expected to see an uptake in office space demand over the next 9 to 12 months. This anticipated improvement in transaction activity is expected to stimulate construction activity in the city. With large upcoming supply expected to outstrip demand, rental values are likely to remain largely stable," it further stated.
SG Highway, which has been a hub for commercial transactions over the last 12-18 months, is expected to remain the most preferred commercial districts in 2013.
However, even as the city is expected to see an increased demand from telecom, banking sector and local businesses, large upcoming supply and existing double digit availability levels in SG Highway is expected to keep rental values stable in the near future.
Meanwhile, talking about rental values, the report stated, "The anticipated buoyant demand coupled with limited supply and low vacancy levels is expected to bring in some rental value appreciation over the next 9 to 12 months."