Office leasing down 15% in Feb; housing demand remains subdued

While the focus remained on the mid-end segment, the total number of launches declined due to abundant availability of ready-to-occupy inventory and cautious buyer sentiment, says CBRE

Office leasing fell 15% while demand for ready housing properties remained subdued during February, according to property consultant CBRE.

"Transaction activity dipped by approximately 15% over the previous month, with Bangalore accounting for almost 50% of the overall space transacted," CBRE said in its monthly update.

Pune and Delhi-NCR also saw strong transaction activity (about 30% of the total transacted space in leading cities) during February, it added.

Cities such as Bangalore, Hyderabad and Kolkata observed an increase in occupier demand in the month.

"Few large sized transactions (above 100,000 sq ft) were also concluded in Bangalore. Among the transactions concluded, Tech Mahindra committed around 140,000 sq ft in Goldhill Supreme, Walmart took up around 130,000 sq ft in Salarpuria Aura and RBS Business Services leased around 100,000 sq ft in RMZ Ecoworld," CBRE said.

This month also saw the renewal of existing leases (around 0.33 million sq ft) mostly from corporate occupiers, it added.

Absorption of office space increased by nearly 10% in 2014 to over 33 million sq ft compared to previous year.

On housing market, CBRE said the "demand for ready residential properties remained subdued". The quantum of residential unit launches also remained low during the month.

Real estate market, especially housing, is facing a huge slowdown since last couple of years due to skyrocketing property prices and high interest rates.

"While the focus remained on the mid-end segment, the total number of launches declined due to abundant availability of ready-to-occupy inventory and cautious buyer sentiment," the consultant said.

Most of the housing projects were launched in Bangalore and Chennai in the mid-end and high-end segments (measuring 100-700 units), while other cities attracted limited new launches during the month, the report said.

"Capital values across most micro-markets in the leading cities largely remained stable due to prevalent low-end user demand and inventory build-up in most locations. Going forward, residential markets are likely to see stable price points with a gradual pick up in launches in most of the leading cities," CBRE said.

However, emerging and peripheral locations with a substantial supply pipeline might witness a slight price correction in forthcoming months, it added.