Office space absorption saw a 14 per cent sequential fall in the quarter ended September, according to international real estate consultancy CBRE’s India Office Market View Q3, 2012. Prime office space absorption across seven key cities decreased to about six million sq ft, compared with about seven million sq ft in the previous quarter.
The National Capital Region (NCR), Mumbai and Bangalore, which accounted for about 75 per cent of the entire transacted space in the previous quarter, saw their share fall to about 62 per cent, while other prominent office markets such as Hyderabad and Chennai saw an increase.
High vacancy levels and low demand resulted in a steep deceleration in supply addition across most leading cities. About five million sq ft of office space was completed in the quarter ended September, compared with about nine million sq ft in the previous quarter, a fall of 47 per cent, primarily owing to vacancy pressures across most office markets, which led to delays in project completion.
NCR, Mumbai and Bangalore accounted for a majority of the new supply, contributing about 77 per cent to the entire space completed during the quarter. The NCR region accounted for about 36 per cent of the entire supply that came on stream, with Gurgaon accounting for the majority of this.
Anshuman Magazine, chairman and managing director (south Asia), CBRE, said, “While the first half of 2012 witnessed an increase in office space absorption, the figures from Q3 confirm the expected decline in demand for office space in the second half of the year. This decline is mainly due to sluggishness in the local, as well as global economy. Companies are consolidating and improving the efficiency of their current space. The slowdown in demand is expected to continue in the coming months. This, coupled with an increase in supply, will keep rates under pressure.”
Rental values remained largely stable across most micro-markets. It is anticipated supply dynamics would continue to dictate rental movements in the coming quarters, with values being largely stable across most micro-markets. Occupier demand remained low. Cost reduction was the primary concern for most companies, owing to the domestic and global economic scenario.
