Absorption of office space in India rose by close to 10 per cent in 2014 to over 33 million sq ft. This figure is indicative of confidence in the commercial property market, and the belief that growth is likely to continue this year, according to a report released by CBRE.
The activity was led by Bangalore at 37 per cent and the National Capital Region with 24 per cent of transactions. During Q4, the total corporate space take-up was more than 9 million sq ft, which was the highest quarterly level over the past three years.
The report indicates there was significant investor interest in “completed and well-leased core commercial assets and IT parks.” With the exception of Mumbai and Hyderabad, all major cities saw an increased demand for office space last year from corporate tenants.
An increased focus on committing to space in under-construction projects in Mumbai was responsible for the drop in transactions in that city. Hyderabad’s “subdued political climate” during the first six months of 2014 was deemed responsible for the drop in commercial property transactions in that city.
Corporate investors preferred to put their money into investments in the office districts located in Gurgaon, Thane, Navi Mumbai, Whitefield (Bangalore), Magarpatta (Pune) and the IT corridor in Hyderabad.
The report also states that banking, financial services and the IT industries dominated the office space market, followed by manufacturing, engineering, construction, telecommunications, research, consulting, healthcare and pharmaceuticals. Bangalore and Delhi also saw demand from the e-commerce segment during Q4.
The country’s economy is poised to start 2015 on a positive note and India’s commercial real estate sector is expected to grow as business conditions continue to improve and the government’s reform agenda starts to gain momentum.
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