Market sentiment for office space remains positive despite overall pessimist outlook: Report

Real estate stakeholders have expressed an optimistic outlook for the office sector, backed largely by a robust office supply pipeline for the next six months, in the latest survey titled Knight Frank-FICCI-NAREDCO Real Estate Sentiment Index Q3 2019 released on Wednesday.

This contrasts with the sentiment towards the residential sector, which is recorded to be pessimistic for the same period.

The office segment has had a strong run in the first half of 2019 with leasing as well as recording new supply completion recording a decadal high of 27.4 million square feet and 24 million square feet respectively.

Sentiment regarding the outlook for the new office supply is strong with 82 per cent of the respondents believing that the coming six months will see new supply additions across the major office markets in the country.

The outlook for the office leasing activity remains unchanged in Q3 2019 with 79 per cent of the stakeholders opining that leasing activity will remain steady or may even improve in the coming six months.

Stakeholder outlook with regards to future rental appreciation has dipped in Q3 2019 with 79 per cent of the stakeholders expecting rents to either remain stable or inch upwards as against the thumping 87 per cent in the preceding quarter. The sentiment, however, is in the positive zone and stakeholders expect rents to inch up in quality office space.

"The office market in NCR is going from strength to strength and the transactions have displayed continued vigour despite the headwinds faced by the Indian economy," said Mudassir Zaidi, Executive Director for North at Knight Frank India.

Co-working and BFSI sector are major shareholders of the office space.

"Even with relatively higher average supply and vacancy levels compared to other office markets in India, the rentals have remained strong and are likely to witness growth due to good demand and very low vacancy in certain micro-markets," he said in a statement.

Headquartered in London, Knight Frank has more than 18,170 people operating from over 523 offices across 60 markets. The group advises clients ranging from individual owners and buyers to major developers, investors and corporate tenants.