Existing vacancy levels and lower demand have led to new office space supply in leading cities in India falling by 34 per cent in the first quarter of this year at 6.6 million square feet against 10 million square feet against the year ago period, according to findings of realty consultancy CBRE’s latest report, India Office MarketView Q1 2014.
“Bangalore led project completions, followed by Delhi NCR and Mumbai together contributing over 80 per cent of the total office space addition in the quarter under review,” the report said.
Office space demand too slowed down in the first quarter of 2014, with around 6.3 million square feet of office space getting absorbed across the leading cities of the country as against 6.6 million square feet in Q1 2013.
“Transaction activity was dominated by the national capital region (NCR), Bangalore and Chennai-representing about 70 per cent of the total space transacted during the quarter. The IT/ITeS, financial and services segments continued to drive demand for office space,” noted the report.
Anshuman Magazine, Chairman and Managing Director, CBRE South Asia said: “Occupiers continue to remain focused on optimal space utilization and cost saving strategies. Going forward, demand is likely to be concentrated mostly in the peripheral micro-markets of leading cities owing to abundant availability of cost effective quality space options.”
“The upcoming elections and the formation of a new government are expected to affect the corporate market as well. In the short to medium term, we can expect firms in the IT/ITeS, banking/financial services and pharmaceuticals to remain key contributors to overall office space absorption across major cities.”