[ecis2016.org] Strengthening business confidence, stabilising global concerns and an optimistic economic outlook, are likely to boost net office absorption across the top eight cities to the highest level in six years, according to a report by Cushman & Wakefield and GRI
Net office absorption across the top eight cities (Ahmedabad, Bengaluru, Chennai, Delhi-NCR, Hyderabad, Kolkata, Mumbai and Pune), is likely to surge by up to 10% to 32.4 million sq ft in 2017, the highest seen in the last six years. Net absorption will gather pace in the last quarter of this year and is expected to close at around 30 million sq ft at the end of 2016. It is expected to continue to gain momentum for the next four years, says the report by Cushman & Wakefield and GRI, titled ‘Revitalising Indian Real Estate: A new era of growth and investment’.
You are reading: Net office absorption across the top eight cities likely to surge by up to 10% to 32.4 million sq ft, in 2017
Key highlights: The market for office spaces in 2016 and 2017
- 2016 net absorption to close at 30 million sq ft.
- 2017 to witness the highest absorption seen in the last six years.
- Bengaluru to continue to be the premier market in 2017.
- Hyderabad to record the second-highest absorption levels in 2017; surpass Delhi-NCR for the first time ever.
- Supply to pick up pace in 2017; to surge 28% from expected 2016 levels.
- Between 2017 and 2020, the top cities will see net absorption of 133 million sq ft.
[ecis2016.org] 9.6 million sq ft Grade A office space absorbed in Q3: Colliers report
Supply of approximately 45-46 million sq ft, a 26%-28% increase, is expected across the top cities in 2017, which would cater to the strengthening demand, from sectors such as IT-BPM and BFSI. With a better regulatory environment expected from next year onwards, developers should be able to step up the pace of construction of new office spaces, as demand from occupiers is expected to remain strong on the back of an encouraging business environment, the report added.
Net absorption and expected supply (2016-2017)
In million sq ft | Absorption (2016 F) | Absorption (2017 F) | Supply (2016 F) | Supply (2017 F) |
Ahmedabad | 0.6 | 0.6 | 3.3 | 1.7 |
Bengaluru | 9.8 | 10.3 | 8.7 | 10.0 |
Chennai | 1.8 | 2.6 | 1.7 | 2.9 |
Delhi-NCR | 4.8 | 4.7 | 3.3 | 9.0 |
Hyderabad | 4.5 | 5.8 | 5.8 | 7.9 |
Kolkata | 1.2 | 1.4 | 3.0 | 2.8 |
Mumbai | 3.7 | 3.2 | 7.0 | 8.5 |
Pune | 3.5 | 3.8 | 2.7 | 2.4 |
Total | 29.9 | 32.4 | 35.5 | 45.2 |
Read also : How technology can resolve pandemic-related tangles in the home interior industry
Source: Cushman & Wakefield Research
“The year 2016 saw stable demand, similar to the previous years. Additionally, gross absorption is expected to be 41 million sq ft by the end of 2016, on account of consolidation and renewals, further demonstrating confidence of the corporates on the economic growth of India. In a steadier environment, as expected in 2017, occupiers will have greater confidence to take investment and expansion decisions. We anticipate net absorption cumulative annual growth, to be at 3% until 2020, which is higher than the growth seen in the last five years. Hyderabad and Pune will be the markets to watch out for,” said Anshul Jain, managing director, India, Cushman & Wakefield.
The top markets in 2017
Bengaluru and Hyderabad: While Bengaluru will continue to be the premier market (accounting for 32% share) in 2017, Hyderabad (18% share) is expected to surpass Delhi-NCR (15% share) for the first time, to record the second-highest absorption levels. The traction in demand in both Bengaluru and Hyderabad will be led by the IT-BPM sector. Both these cities have received notable pre-commitments over the last two years, which would be catered well by the higher supply expected in both these cities.
Bengaluru is likely to see 16% higher supply in 2017, while supply in Hyderabad is expected to increase by 36%. Besides, IT-BPM companies, Bengaluru would also see BFSI and e-Commerce companies taking up office spaces. The Outer Ring Road submarket, is likely to see the maximum demand, followed by Whitefield. In Hyderabad, IT-BPM, pharmaceuticals and healthcare companies would steer demand, with Madhapur and Gachibowli submarkets continuing to see majority of the leasing activity.
Read also : Pyramid Urban 67A at Sector 67, Gurugram – Project Overview
Delhi-NCR: Delhi-NCR is likely to be placed third in terms of net absorption in 2017, with maximum demand seen in the Gurgaon-Other submarket (excludes DLF Cybercity, MG Road and Golf Course Road markets) and Noida-Greater Noida.
Pune: Pune is likely to be close on the heels of Delhi-NCR, with SBD-East submarket (includes Kalyani Nagar, Kharadi, Mundhwa, Yerwada, Nagar Road, Viman Nagar, Hadapsar and Kondhwa) reigning over the others in terms of net absorption.
Mumbai: Mumbai is expected to see a decline in cumulative demand in 2017-2020, estimated to be 12.7 million sq ft, as compared to 2012-2015. This will largely be due higher rental values in the city making it less attractive for the IT-BPM sector in the coming years. Majority of the demand will be concentrated in the suburban and peripheral locations of Thane-Belapur Road driven by the IT-BPM sector, while corporate office preference would be largely concentrated in the SBD location of Bandra-Kurla Complex.
Change in rankings in 2017-2020
City | Rank (2012-2016) | Expected ranking (2017-2020) | Share in 2017-2020 | Net absorption 2017-2020 (in million sq ft) |
Bengaluru | 1 | 1 | 30% | 39.3 |
Delhi-NCR | 2 | 4 | 13% | 17.1 |
Mumbai | 3 | 5 | 10% | 12.7 |
Pune | 4 | 3 | 13% | 17.3 |
Chennai | 5 | 6 | 7% | 8.9 |
Hyderabad | 6 | 2 | 22% | 29.5 |
Kolkata | 7 | 7 | 4% | 5.4 |
Ahmedabad | 8 | 8 | 2% | 2.7 |
Source: https://ecis2016.org/.
Copyright belongs to: ecis2016.org
Source: https://ecis2016.org
Category: Lifestyle