Top 8 cities record 12.5 million sq ft office absorption in H1 2017 : Cushman & Wakefield report
According to Cushman & Wakefield report, top eight property markets across India have recorded total net absorption of 12.5 million sq ft during the first half of 2017, down 11% from a year ago. Of the total net absorption between January and June, over nearly 57% was recorded in the second quarter of 2017. All cities registered an on-year decline in net absorption during the period due to a slow start in the first quarter ending March except Chennai, which registered a year-on-year growth of over 110% in the first half of 2017.
The report added that the tapering supply has largely been responsible for the slowdown of net absorption in 2017, though there are some active inquiries by occupiers for consolidation/relocation of their office spaces hinting towards a healthy leasing activity by end of the year.
Supply for the first half of the year recorded a decline of nearly 50% as compared to last year with almost all markets experiencing a slowdown. Total supply was recorded at approximately 10 million sq ft in the first half of 2017. Chennai being again the only exception to this saw an increased supply of 32% from a year ago. This lack of supply has been a critical reason for the slowdown in uptake of space in the first half of 2017.
Anshul Jain, Managing Director, India, Cushman & Wakefield, said, “Leasing activity has gathered pace in the second quarter owing to large transactions by IT-BPM and BFSI occupiers. Despite headwinds and cautious stance by IT-BPM occupiers, the IT-BPM sector continues to be the primary demand driver. Limited availability of quality supply has encouraged occupiers to pre-commit office spaces resulting in a significant increase of about three times in such activity; primarily driven by IT-BPM and healthcare sectors in Hyderabad, Gurgaon and Bengaluru.”
“As the dust settles on the geo-political and economic upheavals across the world along with some ground changes such as increased supply of office space, we are expected to see a healthy net absorption of close 32 – 35 msf by end of the year. Further with pre-commitments of close to 6 million sq ft, we can expect the momentum of absorption to continue,” Jain added.