Bangalore, June 12, 2014 - India is likely to witness the second highest demand for office space in 2014 among the top 30 cities in the Asia-Pacific region, according to a report by property consultancy which says Bangalore is expected to be the biggest market in the country due to the expansion of IT, ITeS and multinational companies.
Bangalore is the second city in the list with an expected demand of 6.3 million sq ft this year while Tokyo leads the pack with 7.6 million sq ft. "IT/ ITeS has been greatly affected by the global economic scenario impacting the growth of the sector in India. With a more favourable dollar to rupee exchange rate and the improvement in global economic scenario, we expect the industry to benefit in terms of increase in exports of IT services from India," said Sanjay Dutt,
executive managing director-south Asia.
Expansion by companies will give a fillip to office space absorption in Bangalore, which will see a growth of 16 per cent in 2014 compared with the previous year, Dutt said, adding that a majority of the demand in the city would be concentrated in suburban locations such as Whitefield and the Outer Ring Road belt.
While office space absorption in Mumbai is likely to see a 93 per cent rise this year, the addition of 1.5 million sq ft office space will only keep its vacancy levels at a high of 25 per cent, according to the report. "Given the scenario, the rental values of these locations are expected to remain stable with a downwards bias," said Dutt.
Key suburban markets such as Gurgaon in Delhi-National Capital Region, and Malad and Goregaon in Mumbai have witnessed lower demand but large-scale leasing activity by companies.
An HR consultancy has taken up around 7,50,000 sq ft in IT Special Economic Zone (SEZ) development in Gurgaon while a Banking, Finance Services & Insurance (BFSI) company leased 180,000 sq ft for back-office operations in the Malad-Goregaon area.
Leading markets in the country recorded a 7 per cent decline in total absorption of office space between 2012 and 2013. "We had created about 1.8 million sq ft of office space in 2013, out of which we could lease only about 1.2 million sq ft. So, for us, leasing activity was about 20 per cent below our expectations," said Atul Chordia, managing director of Panchshil Realty.
Surjit Singh, president of marketing in RNA Corp, agreed. "Even though there have been enquiries, leasing activity has been very slow in 2013 as people have been looking for better deals," he said, adding that RNA Corp's Corporate Park in Goregaon, which was recently opened for leasing, had seen slow lease transactions. By the end of 2013, the total office space absorption is expected to be 22 million sq ft, down 11 per cent from the previous year.
According to the report, in 2013 nearly 25-30 per cent of the gross office space absorption comprised relocations and/or consolidations as many companies increasingly relocated to better quality, more efficient and cheaper office spaces in the suburbs and peripheral micro-markets across cities. CCI Newswire