New Delhi: India’s commercial real estate sector continues to boom as demand for prime office space reached a 10-quarter high of about 11 million square feet. for the July – September period, according to real estate consultancy CBRE’s India Office Market View report released on Wednesday.
The demand for office space rose 14% on year-over-year basis. As on September 30, 2016, overall prime office space absorption across the seven leading cities was about 28 million sq. ft. for the year, with about 11 million sq. ft. absorbed in the third quarter.
The cities which fueled the sector were Bengaluru with a rise in demand of 24%, followed by Hyderabad and Mumbai with growth of 17% and 16%, respectively.
“The year 2015 was a record year—with the segment witnessing the highest ever annual office absorption. With just a few months left till the end of the year, I am optimistic that this number will be met, if not surpassed,” said Anshuman Magazine, chairman, India & South East Asia, CBRE.
IT/ITeS firms continued to lead office transaction activity, accounting for about 54% of the deal closures. Besides the IT/ITeS sector, BFSI, and Engineering & Manufacturing were the other sectors driving demand for office space.
“India continues to be a key outsourcing location among global corporates and this is reflective in the steady growth in demand for prime office space. A recent trend that has been noted is the increase in demand for small to medium sized office space, not just in the metros, but also in smaller cities,” said Ram Chandnani, managing director, Transactions Services, CBRE South Asia Pvt. Ltd.
The growth in the rentals has now moved to the relatively smaller markets of Chennai, Hyderabad and Pune, even as bigger markets, such as Bangalore, continued to record rental growth.
Lower space availability along with more demand from corporate sector led to a 1-10% q-o-q rental growth in peripheral micro-markets of these cities across the IT, non-IT and SEZ segments, according to the report.