India’s office market hits 500 million square foot mark
According to CBRE India’s latest India Office MarketView Report Q4 2016, India’s office market witnessed an all time high annual absorption of over 43 million square feet in 2016, registering a growth of 9% on a year-over-year basis. New office supply during 2016 touched 35 million square feet, with India’s office stock reaching a milestone of over 0.5 billion square feet (as of Q4 2016) – higher than several East Asian economies.
Commenting on the findings of the report, Mr. Anshuman Magazine, Chairman – India & South East Asia, CBRE said, “The commercial real estate market in India has been performing well for the past two years. This is evident in the record absorption levels witnessed in 2016. India continues to show positive movement, despite global uncertainties. Policy initiatives undertaken by the Government in the recent past is expected to bring transparency into the sector, which is a much needed step towards enhancing consumer and investor confidence.”
“Commercial activity and occupier demand is expected to remain steady in the coming months, backed by corporates looking to expand/consolidate operations. Regulatory clearances in key locations are also likely to boost leasing activity in the coming quarters. Occupier enquiries for medium to large sized office spaces are expected to be closed in forthcoming quarters, adding to the transaction momentum. Due to the limited availability of ready to move in Grade A supply, occupiers with medium and large size requirements will focus on pre-commitments in under construction/built-to-suit developments across key micro-markets in the leading cities in the country. Occupiers, while expanding their footprint, are likely to keep a strong check on city infrastructure and focus on space utilization ratios and innovation in workplace strategies”, said Mr. Ram Chandnani, Managing Director – Advisory & Transaction Services, CBRE South Asia.
On the supply front, a significant quantum of space is expected to be released in the decentralized locations of leading cities over the next few quarters. Most of this supply is concentrated in peripheral locations of leading cities, which is likely to attract enhanced enquiries and strong pre-commitment activity in the coming months. The Government’s policy initiatives (RERA and REIT), coupled with the impact of the recent demonetization drive is likely to result in the formalization and regulation of the sector. This in turn, is expected to boost transparency and investment flows into the commercial real estate sector, going forward.