India’s IT capital Bangalore, now known as Bengaluru, could top the annual office demand in 2016 as the Southern city absorbed the main share of the national demand last year, experts said.
Bangalore topped the annual office demand with nearly one third of the country’s total absorption across leading cities in 2015, followed by the National Capital Region with a fifth share, a recent study of real estate consulting firm CBRE showed.
Bangalore led the annual office demand with 32% share, followed by NCR region with 23% share, according to the findings of of CBRE’s report, India Office Market View for Q4 2015.
The report recorded an 18% annual rise in demand for corporate realty space in India’s top seven cities to 38 million sq ft in 2015, the highest annual rise till date.
This positive demand was indicative of an overall improved economic sentiment among domestic and international corporate, the report said.
Absorption of Grade-A office space across key cities in India witnessed a quarterly growth of approximately 26% during the October–December period—translating to over 12 million sq. ft. of leased office space.
“India is an established outsourcing destination for various multinationals, who continue to outsource their operations to major cities in India; a key reason for a sustained spurt in office transaction activity,” said Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia, said.
“This coupled with a steady macro-economic climate and an overall positive market sentiment, encouraged corporate office occupier demand in 2015,” Magazine said.
IT/ITeS firms across the seven leading cities, garnered a share of more than 56% of the entire transaction activity reported during the year.
Other sectors such as banking / financial services, engineering / manufacturing, e-Commerce and research / consulting also saw significant traction, collectively contributing about 29% to the total transacted space in the year.
Fresh supply of office space development rose to a five year high of around 45% during the year over the previous year. These development completions were led by Bangalore, followed by Delhi NCR, Hyderabad and Mumbai.
“Corporate occupier demand for office space is expected to continue to grow in the forthcoming months,” said Ram Chandnani, Managing Director – Transactions Services, CBRE South Asia.
The expectation is based on expansion and consolidation strategies of corporate firms to continue to be in Greenfield projects and pre-committed space in under construction projects, he added.
Rental values remained largely stable across most micro-markets of leading cities during the quarter. Demand for newly completed properties, however, led to rental growth in select peripheral micro-markets.
(In association with Construction Standard)