The annual absorption of office space in India crossed 42 million sq.ft. in 2017, as per CBRE South Asia’s latest India Office Market View Report – Q4 2017 report.
This compares with annual absorption of 43 million sq.ft. in 2016, signalling a contraction of the segment.
Bengaluru and Delhi NCR accounted for more than 50% of annual leasing activity, the real estate services firm said. Annual supply for prime office space was over 29 million sq.ft. during the year, a decline of about 18% on a y-o-y basis, it added.
Leasing activity in 2017 was driven by the IT sector with a 32% share.
Other segments that created demand across key cities were BFSI (19%), engineering and manufacturing (17%) and research consulting and analytics firms (8%).
Demand for co-working space continued to rise (almost quadrupling in 2017 to touch 2.6 mn sq.ft.), with both global and domestic players expanding their operations in key cities like Bengaluru, Gurgaon and Mumbai.
Southern cities
As per the findings, the Southern cities of Bengaluru, Hyderabad and Chennai, on an annual basis, witnessed a rental increment across almost all micro-markets. “After a record 2016, the growth momentum of India’s office market continued in 2017 as well,” Anshuman Magazine, chairman –India & South East Asia, CBRE, said.
“Despite various disruptions including the advent of technology and new office formats, overall demand for office space remained robust,” he added.
He said while key metros continued to witness activity, several smaller cities were seen emerging as preferred locations by corporates looking to expand their footprint in the country.
“Hyderabad was one such city which has witnessed significant activity and demand for office space in the past 12 months,” Mr. Magazine said.
“During 2017, the advent of co-working/shared offices led to some disruptions in the office segment,” said Ram Chandnani, managing director – Advisory & Transaction Services India, CBRE South Asia Pvt. Ltd.
“However, overall leasing activity continued to be strong. In 2018, we expect demand for office space to remain steady across key locations in the country,” he added. On a quarterly basis, continued occupier interest resulted in leasing activity rising by about 18% q-o-q, crossing 12 million sq. ft. in the October to December 2017 period. While Bengaluru and Delhi NCR continued to remain the key drivers, Hyderabad overtook Mumbai in terms of office leasing during the quarter. Supply addition during the quarter was close to 11 million sq.ft., the report said.
