India office market poised for growth in 2015
New Delhi, May 26, 2015 –According to Colliers International’s India office property market overview April 2015, the Indian economy continued to see positive trends, withBusiness Confidence Indexmarginally up by 20 basis pointsin January 2015. India’s GDP recorded a 7.5% growth in the
October – December 2014; and the forecast is for the GDPto expand by 7.8% in January to March 2015 quarter. Inaddition, the WPI (Wholesale Price Index) inflation reachedits 10-year low at -2.06% in February 2015.
Both the economy and the office market turned the cornerin 2014 and are poised for further improvement in 2015
· For the commercial real estate sector, 2015 witnessed agood start, with first quarter office absorption of 8.5 millionsq ft in the eight major metro cities in India, headed by
Bengaluru (3.82 million sq ft, including 1.74 million sq ftpre-committed), NCR-Delhi, Gurgaon and NOIDA (1.48million sq ft), Mumbai (1.33 million sq ft), Pune (0.89million sq ft), Chennai (0.81 million sq ft) and Kolkata (0.22million sq ft).
· Office space absorption increased by 2.8% from lastquarter.
· Tenants from IT / ITeS and BFSI were the primarysectors driving this demand. Within IT / ITeS, E-commercecompanies took up 52% of the total space absorbed.
· Select micro markets in cities like Bengaluru and Mumbai witnessed marginal increase in rental values in the range of 1% – 3% QoQ. Both the economy and the office market turned the corner in 2014 and are poised for further improvement in 2015.
“Among all the major markets, Bengaluru office market remains in the “sweet spot” in terms of supply-and-demand fundamentals. About 2 million sq ft of office space is expected to witness completion next quarter, out of which about 0.2 million sq ft is already committed. This steady increase in development activity and greater domestic and foreign investor interest in office market should result in additional occupancy and rent growth. Apart from this in Gurgaon many RFPs are floating and I anticipate an increase in office absorption in the near future. The Institutional sectors like Sector 32 and 44 will continue to remain preferred office locations due to location advantages and competitive rentals. Also micro-markets such as NH-8, DLF Cyber City, Golf Course Road and Sohna Road has witnessed 5 – 10% appreciation in rental values due to high occupancy rates in properties in these micro-markets, and the fact that these are currently the preferred locations of occupiers. Absorption has increased, especially in Special Economic Zones, as a number of large format deals have been concluded in trailing 12 months and many are in the pipe line and expected to be concluded in the coming quarters” says Vikas Kalia, National Director, Office Services
According to the report finding expanding economy, improving business sentiment and increasing job creations will keep the momentum in demand foroffice real estate in 2015. In response to tenant
demand, the strongest markets (namely Bengaluru andGurgaon) will witness development of new stock. However,developer sentiment towards speculative construction ofoffice buildings is expected to remain cautious, and this inturn will limit the risk of further overbuilding.
For more results from Colliers International’s India Office Property Market Overview April 2015, please visit
http://www.colconnect.in/CI/OPMO/INDOPMO.pdf .
CCI Newswire
