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Office space demand high in Bangalore
The demand for office space remained upbeat across major cities and stood at approximately 14 million sq.ft. in the first quarter of 2008, according to the latest Cushman & Wakefield report. The demand included absorption of 8.2 million sq.ft. and pre commitments of approximately 5.5 million sq.ft. The absorption in the first quarter recorded a growth of 67 per cent over the absorption in same period last year, reiterating the fundamentally strong market dynamics which continue to drive demand.
Bangalore recorded the highest office space demand in the Q1 2008 with 5.14 million sq. ft. followed by NCR with 2.2 million sq. ft. The two cities also witnessed the highest pre-commitments in the quarter. The quantum of pre-commitments has not witnessed a significant increase in the first quarter vis-À-vis last year which is due to the increased availability of ready-to -move-in space in various cities, predominantly in the peripheral and suburban micro markets. According to the Cushman & Wakefield report, the first quarter of 2008 witnessed a total office supply of 15.54 million sq. ft. which constitutes approximately 19 per cent of the total expected supply for the year 2008 which is estimated to be 82.8 million sq.ft.
Rentals across office real estate markets showed a marginal average increase of six per cent over the last quarter as indicated by C&W, coinciding with the increase in overall office supply.
The rents in the CBD locations continue to witness relatively higher growth. However, despite the modest increase overall, rentals in a substantial number of micro-markets across the major cities remained stagnant in Q1 2008. Moreover, certain suburban and peripheral locations witnessed a slight decline in rental value. The fall in Noida was approximately 3%. The stability and marginal decline can be attributed to the high price points already attained by most of the micro markets and the increased availability of ready options. Pune, on the other hand, emerged as the highest riser in rental growth across cities with Viman Nagar, a suburb, witnessing an average rental growth of 24 per cent.
Limited fresh supply and availability of good quality Non-IT space led to appreciation of rental values in this micromarket.
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Property Plus
Bangalore
Chennai
Hyderabad
Kochi
Malabar
Thiruvananthapuram
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