India’s GDP recorded a 7.5% growth in the October - December 2014; and the forecast is for the GDP to expand by 7.8% in January to March 2015 quarter.
According to Colliers International’s India office property market overview April 2015, the Indian economy continued to see positive trends, with Business Confidence Index marginally up by 20 basis points in January 2015. India’s GDP recorded a 7.5% growth in the October - December 2014; and the forecast is for the GDP to expand by 7.8% in January to March 2015 quarter. In addition, the WPI (Wholesale Price Index) inflation reach edits 10-year low at -2.06% in February 2015.
Both the economy and the office market turned the corner in 2014 and are poised for further improvement in 2015
“Among all the major markets, Bengaluru office market remains in the “sweet spot” in terms of supply-and-demand fundamentals. About 2 million sq ft of office space is expected to witness completion next quarter, out of which about 0.2 million sq ft is already committed. This steady increase in development activity and greater domestic and foreign investor interest in office market should result in additional occupancy and rent growth. Apart from this in Gurgaon many RFPs are floating and I anticipate an increase in office absorption in the near future. The Institutional sectors like Sector 32 and 44 will continue to remain preferred office locations due to location advantages and competitive rentals. Also micro-markets such as NH-8, DLF Cyber City, Golf Course Road and Sohna Road has witnessed 5 – 10% appreciation in rental values due to high occupancy rates in properties in these micro-markets, and the fact that these are currently the preferred locations of occupiers. Absorption has increased, especially in Special Economic Zones, as a number of large format deals have been concluded in trailing 12 months and many are in the pipe line and expected to be concluded in the coming quarters” says Vikas Kalia, National Director, Office Services
According to the report finding expanding economy, improving business sentiment and increasing job creations will keep the momentum in demand for office real estate in 2015. In response to tenant demand, the strongest markets (namely Bengaluru and Gurgaon) will witness development of new stock. However, developer sentiment towards speculative construction of office buildings is expected to remain cautious, and this in turn will limit the risk of further overbuilding.
Both the economy and the office market turned the corner in 2014 and are poised for further improvement in 2015
- For the commercial real estate sector, 2015 witnessed a good start, with first quarter office absorption of 8.5 million sq ft in the eight major metro cities in India, headed by Bengaluru (3.82 million sq ft, including 1.74 million sq ft pre-committed), NCR-Delhi, Gurgaon and NOIDA (1.48million sq ft), Mumbai (1.33 million sq ft), Pune (0.89million sq ft), Chennai (0.81 Million sq ft) and Kolkata (0.22million sq ft).
- Office space absorption increased by 2.8% from last quarter.
- Tenants from IT / ITeS and BFSI were the primary sectors driving this demand. Within IT / ITeS, E-commerce companies took up 52% of the total space absorbed.
- Select micro markets in cities like Bengaluru and Mumbai witnessed marginal increase in rental values in the range of 1% – 3% QoQ. Both the economy and the office market turned the corner in 2014 and are poised for further improvement in 2015.
“Among all the major markets, Bengaluru office market remains in the “sweet spot” in terms of supply-and-demand fundamentals. About 2 million sq ft of office space is expected to witness completion next quarter, out of which about 0.2 million sq ft is already committed. This steady increase in development activity and greater domestic and foreign investor interest in office market should result in additional occupancy and rent growth. Apart from this in Gurgaon many RFPs are floating and I anticipate an increase in office absorption in the near future. The Institutional sectors like Sector 32 and 44 will continue to remain preferred office locations due to location advantages and competitive rentals. Also micro-markets such as NH-8, DLF Cyber City, Golf Course Road and Sohna Road has witnessed 5 – 10% appreciation in rental values due to high occupancy rates in properties in these micro-markets, and the fact that these are currently the preferred locations of occupiers. Absorption has increased, especially in Special Economic Zones, as a number of large format deals have been concluded in trailing 12 months and many are in the pipe line and expected to be concluded in the coming quarters” says Vikas Kalia, National Director, Office Services
According to the report finding expanding economy, improving business sentiment and increasing job creations will keep the momentum in demand for office real estate in 2015. In response to tenant demand, the strongest markets (namely Bengaluru and Gurgaon) will witness development of new stock. However, developer sentiment towards speculative construction of office buildings is expected to remain cautious, and this in turn will limit the risk of further overbuilding.
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