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Absorption of 31 million sq ft office spaces likely by end-2015: Study


New Delhi, Nov 27 : With an improvement seen in occupiers’ sentiment in the commercial real estate, net absorption of offices spaces in India is expected to be about 31 million square feet by end-2015.

According to a just concluded ASSOCHAM-JLL joint study, “A total of about 34 million sq ft of office space is expected to become operational in 2015 and India’s office stock is likely to settle at 440 million sq ft by end-2015.”

Titled, ‘Housing for All: Catalyst for development and inclusive growth, the study states that with a pro-business government at the Centre, the office sector is expected to see a lot more traction and various multi-national (MNC) occupiers and investors entering the country.

The ASSOCHAM-JLL study has forecasted that 2015 will provide a window of opportunity for occupiers and investors as rents and capital values in most of micro-markets are at their cyclical bottom.

Select micro-markets of cities still offer attractive rents as compared to its peak while several of them have already shown signs of revival due to strengthening demand for office space, highlighted the study.

Vacancy rates are likely to be in the range of 15 to 18 percent by end-2015, added the study.

It is also forecasted that office demand is likely to remain robust at 34 million sq ft at 2015 year-end.

Amid tier-I cities, National Capital Region (NCR), Mumbai and Bangalore are likely to witness big ticket transactions along with substantial number of leasing transactions in operational and under-construction projects.

While among tier-II cities, Pune is expected to see healthy demand in the medium term as few quality information technology (IT) special economic zones (SEZs) are in an advanced stage of construction with strong pre-commitments.

In terms of supply of newly completed office spaces, Delhi-NCR is showing a forecast supply of 10 million sq ft at the end of 2015 while Mumbai and Bangalore are expected to inject about six million sq ft and about eight million sq ft respectively of new office spaces.

Against this supply, Delhi-NCR, Mumbai and Bangalore are forecast to record net absorption of 6.1 million sq ft, about seven million sq ft and 7.6 million sq ft respectively by end-2015.

Amid tier-II cities, Pune is expected to lead the market in constructing new office spaces adding around 44.7 million sq ft of office space.

The ASSOCHAM-JLL study has also forecasted that with about 12-15 malls being under construction and expected to be operational by end-2015 at pan-India level thereby adding about 6.7 million sq ft of new organized retail space. “Delhi-NCR is expected to see largest number of completions, followed by Mumbai and Bangalore.”

In terms of vacancy rate in organized retail space, it is forecasted to be highest in Delhi-NCR at 24 percent followed by Mumbai and Pune both at 20 per cent while the lowest vacancy rate is likely to be seen in Kolkata followed by Chennai, Bangalore and Hyderabad. (ANI)

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