CBRE India, India's leading Real Estate Consulting firm, announced the findings of its latest India Office MarketView Report – Q4 2016. As per the findings, India's office market witnessed an ALL TIME HIGH annual absorption of over 43 million sq. ft. in 2016, registering a growth of 9% on a y-o-y basis. Supply addition during the year touched 35 million sq. ft. with India's office stock reaching a milestone of over 0.5 billion sq. ft. (as of Q4 2016) - higher than several East Asian economies.

Realty Bytes: 2016 at a glance

  • Bangalore and NCR dominate leasing on an annual basis with 47% share
  • IT/ITeS firms continue to lead office transaction activity; account for about 50% of the transaction activity during the last quarter
  • Hyderabad witnessed a steep rise in occupier demand, with absorption more than doubling to cross 6 million sq. ft.
  • Small to medium sized transactions (under 50,000 sq. ft.) remained the preferred format of occupation
  • The share of domestic corporates in transaction activity grew from 41% in 2015 to 43% in 2016
  • Mumbai and Bangalore accounted for almost half of the annual supply addition

2017: The Way Forward

  • PE players to continue to invest sizable monies in commercial real estate
  • Overall take-up expected to remain strong in 2017; REITs to have a positive impact.
  • Corporate occupiers likely to remain cost sensitive, consider adoption of workplace strategies for efficient space-utilization
  • Infrastructure improvements to be a critical factor for occupier location strategy
  • Pre-let activity to continue in quality, cost-effective projects that are nearing completion
  • Rental divergence expected between core (tapering growth) and peripheral micro-markets (growth stable/rise)
  • Tenants willing to pre-commit to have an upper-hand in rental negotiations

City Highlights - Q4, 2016

  • National Capital Region
    • Quarterly leasing almost doubled with Gurgaon continuing to lead leasing activity in the NCR, constituting a share of 61%
    • Rents across micro-markets remained stable with the exception of DLF Cyber City.
    • Leasing activity occurred mostly in the form of small-medium sized transactions (10,000 – 50,000 sq. ft.)
  • Mumbai
    • Transaction activity was largely stable, as compared to the previous quarter
    • Leasing activity in Peripheral markets of Vikhroli, Goregaon, Malad and Airoli accounted for almost 60% of office take up in the city
    • Rental and capital values continued to remain stable across most micro-markets
  • Hyderabad
    • Hyderabad, witnessed a steep rise in occupier demand, with absorption more than doubling to cross 6 million sq. ft. during 2016
    • More than 80% leasing activity was concentrated in the IT Corridor
    • About 2-7% rental increase reported in CBD, IT Corridor and Extended IT Corridor
  • Bangalore
    • Rise in quarterly demand, mainly in ORR, PBD and NBD
    • Supply completion also largely concentrated in ORR, PBD and NBD;
    • Continued rental escalation across most micro-markets
  • Chennai
    • Strong leasing activity reported in 2016, OMR Zone I and OMR Zone II contributed to over 60% of the leasing activity
    • Rentals continued to strengthen across major micro-markets; supply addition restricted to small-sized IT/ non-IT developments
  • Pune
    • Small-to-medium sized transactions drove demand for office space
    • Supply completion in the form of small to medium-sized non-IT and SEZ developments
    • Rental values grew in the IT and non-IT segments across most micro-markets
  • Kolkata
    • PBD micro-markets of Salt Lake V and Rajarhat continued to lead leasing activity
    • Rental values remained stable across all micro-markets
    • Supply addition mainly in SBD and PBD
Commenting on the findings of the report, Mr. Anshuman Magazine, Chairman –India & South East Asia, CBRE said, "The commercial real estate market in India has been performing well for the past two years. This is evident in the record absorption levels witnessed in 2016. India continues to show positive movement, despite global uncertainties. Policy initiatives undertaken by the Government in the recent past is expected to bring transparency into the sector, which is a much needed step towards enhancing consumer and investor confidence."

City Office Supply (%)
2016 2015
Delhi - NCR 8% 26%
Mumbai 23% 9%
Bangalore 23% 32%
Pune 8% 9%
Chennai 8% 7%
Hyderabad 17% 15%
Kolkata 13% 1%
"Commercial activity and occupier demand is expected to remain steady in the coming months, backed by corporates looking to expand/consolidate operations. Regulatory clearances in key locations are also likely to boost leasing activity in the coming quarters. Occupier enquiries for medium to large sized office spaces are expected to be closed in forthcoming quarters, adding to the transaction momentum. Due to the limited availability of ready to move in Grade A supply, occupiers with medium and large size requirements will focus on pre-commitments in under construction/built-to-suit developments across key micro-markets in the leading cities in the country. Occupiers, while expanding their footprint, are likely to keep a strong check on city infrastructure and focus on space utilization ratios and innovation in workplace strategies." said Mr. Ram Chandnani, Managing Director – Advisory & Transaction Services, CBRE South Asia Pvt. Ltd.

On the supply front, a significant quantum of space is expected to be released in the decentralized locations of leading cities over the next few quarters. Most of this supply is concentrated in peripheral locations of leading cities, which is likely to attract enhanced enquiries and strong pre-commitment activity in the coming months. The Government's policy initiatives (RERA and REIT), coupled with the impact of the recent demonetization drive is likely to result in the formalization and regulation of the sector. This in turn, is expected to boost transparency and investment flows into the commercial real estate sector, going forward.
Click Here
To Know More or to Contact the Manufacturer
Please let us know your name.
Invalid Input
Please let us know your Designation.
Please let us know your Contact Number.
Please let us know your email address.
Please brief your query.
Our other Value-Added Services:

To receive updates through e-mail on Products, New Technologies & Equipment, please select the Product Category(s) you are interested in and click 'Submit'. This will help you save time plus you will get the best price quotations from many manufacturers, which you can then evaluate and negotiate.

Invalid Input
Invalid Input
Invalid Input
The Kartarpur Corridor between India and Pakistan connects the historic gurdwaras of Dera Baba Nanak in Gurdaspur District of Punjab (India) with Gurdwara Darbar Sahib, Kartarpur, in the Narowal District of Punjab (Pakistan)

Read more ...

Authors Er. Vivek Abhyankar, Founder of SGAWings Civil Engineering Consultant and Advisor (OPC), Mumbai & Dr. N. Subramanian, an award-winning author, consultant, and researcher, based at Maryland, USA, present a brief review

Read more ...

The Modi government’s ambitious and aggressive ₹6 trillion National Monetisation Plan (NMP), high on intent with enabling framework, holds the promise of success, notwithstanding various challenges on

Read more ...

34-InfraDespite their relatively small markets, Bhutan and Maldives provide Indian construction companies a dynamic space for infra development with an appreciable degree of social and cultural familiarity

Read more ...

Very few places in our world are more educational than museums. Museums are storehouses of knowledge and help us understand our world better. As institutions at the heart of society, museums have the power to define

Read more ...

Investors are looking to hedge their risks by diversifying their portfolios with Alternative Investments such as Commercial Real Estate. An alternative investment is one which is outside the traditional

Read more ...

Notwithstanding some bright spots, the flagship Smart Cities Mission (SCM), which marked its 6th anniversary on June 25, is yet to live up to its tall promises. Their sub-optimal performance, precipitated by

Read more ...

Indian construction companies and equipment manufacturers should explore opportunities outside the country as India has the potential to become a global manufacturing hub. Reports Saeeduddin Faridi

Read more ...

TDR policy faces many constraints and challenges and several reformative steps are needed at the policy level to bring momentum to it. Though the concept of TDR (Transferable Development Rights), largely aimed

Read more ...

With the launch of Digital Roof 4.0 (DR4.0), a new day has dawned in the Indian construction sector. Digital Roof 4.0 is a multi-faceted engineering and management company set up with the avowed intention

Read more ...

Focusing on infrastructure as a key driver of economic growth, the government is embarking on a massive PSEs asset monetisation programme as part of Infrastructure Vision 2025. This ambitious programme is meant

Read more ...

Cities all over the world are rapidly changing and expanding, and proper urban planning is now more important than ever before. Singapore 'urban model' is a classic example of highly targeted urban planning which has transformed Singapore's

Read more ...

In terms of its contribution to the global economy, the construction industry is at the forefront with a staggering annual share of 11- 12 trillion dollars. It is a large employer with more than 300 million people

Read more ...

For years, construction has lagged behind other industries regarding technological advancement, disruption and digital automation. Finally, this is starting to change. The reducing cost of digital enablement

Read more ...

At a time when India is undergoing rapid urbanisation, integrating technologies like AI and IoT will help in faster and better planning and designing of smart, tech-enabled cities. Technology is transforming the real

Read more ...

The rapid pace of technological advancement is changing every single aspect of our lives — and all of the industries and sectors in which we work. Consequently, civil engineering is not an exception here. For instance

Read more ...

Ease of purchase, increasing affordability, growing importance of spacious and safe environs of one’s own home due to increased health consciousness, and the trend of homeownership over renting, have all led to the revival

Read more ...

There are several failures of buildings and bridges and other constructed facilities; it is important to learn from these failures so that such catastrophes do not occur in the future (Feld and Carper

Read more ...

The unique and fast growing real estate marketing concept of ‘Fractional Ownership’ has opened a new, safe, and profitable avenue of investment for retail investors in expensive A-grade office real estate

Read more ...

Infrastructure, together with real estate and housing, which are key to economic development, were severely hit due to the Corona pandemic; however, there have been many bright spots, especially the progressive policy

Read more ...

×
Sign-up for Free Subscription
'India Construction Week'
Weekly e-Newsletter on Construction Industry
Get the latest news, product launches, projects announced / awarded, government policies, investments, and expert views.