Supply is falling: Bangalore retains its top position in the commercial
space absorption list at 11.53 million sq.ft along with additional
pre-commitments of 5 million sq. ft for next year.
The commercial space absorption in India rose eight per cent in 2011
to about 36 million sq. ft. Real estate consultant Cushman &
Wakefield, however, cautioned that the vacancy level continues to be
high at 18 per cent, despite a reduced supply flowing into the market
now.
There was a drop of 20 per cent in the total supply entering the
market as compared to the previous year, the report by Cushman &
Wakefield said.
Bangalore continued to top the charts with highest absorption in the
country at 11.53 million sq.ft along with additional pre commitments of 5
million sq. ft for next year.
Chennai and NCR also witnessed a considerable growth in the space
usage during the year accounting for 32 per cent and 15 per cent,
respectively, compared to the previous year, it said.
Mr Anurag Mathur, Managing Director of Cushman & Wakefield India,
said that while the first half of 2011 had witnessed dynamic leasing
activities, the second half was more subdued. “…The absorption could
have been higher had several corporations not deferred their expansion
plans in the second half of the year, in the light of weak economic
sentiments in the Western markets,” he said.
IT, BPO and BFSI sectors, which are the key demand drivers and have
the significant share of the absorption, have seen a clear slowdown in
expansion plans, thereby affecting the demand, he pointed out. The
non-IT absorption, on the other hand, registered a 30 per cent growth
adding to the positive demand.
“Despite the impending uncertainty on the back of weak global cues,
the growth in emerging economies is still expected to be seven per cent
or more, which continues to drive the absorption in difficult times,” he
said.
The total offices space supply was recorded at 34.63 million sq.ft,
most of which was delivered in the first two quarters of the year.
Cushman & Wakefield further said that the decline in supply could be
attributed to a large pipeline of projects under construction coupled
with lower pre-commitments in the latter part of the year on account of
the uncertain economic scenario.
“The projected supply of 51 million sq.ft in the next year is likely
to be controlled by the developers, who may alter the pace of
construction to align with demand fluctuations. This may keep rentals
under pressure leading to flat trend through most of the year,” Mr
Mathur added.
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