Bangalore: With little supply in the central business district, Bangalore, India’s information technology hub, saw the highest demand for office space in the first quarter of 2008 at 5.14 million sq. ft. It was followed by the National Capital Region (NCR), comprising New Delhi and its satellite cities, with 2.2 million sq. ft.
A report by property consultants Cushman and Wakefield says though the demand for office space remained upbeat at 14 million sq. ft across India’s cities, around 15.54 million sq. ft of supply has come into the market in the same quarter.
In both NCR and Bangalore, much of the limited supply was a result of large pre-commitments in 2007 that were delivered in the first three months of this year.
“The demand in Bangalore has been spurred by a number of new aero-engineering and logistics companies here. The problem here is, with huge demand for Grade A office space in prime areas and little supply, there is a problem of oversupply in peripheral areas like Whitefield and Marathahalli,” said Naresh Dandapat, regional director (south) at Knight Frank India, a property consultancy firm.
In Mumbai 11% of the total projected supply of 2008 (19 million sq. ft) entered the market in the first quarter and most of these are in suburban business districts such as Andheri, Bandra-Kurla Complex and a special economic zone in Powai.
Office rentals increased marginally at 6% with about a 7-9% rise in Bangalore and a sharp 24% growth in Pune. NCR rental values rose 2–4% in select micro markets while the commercial segment of Gurgaon saw rentals going up 3% with fresh supply in the quarter. Rental values fell in certain areas such as the IT segment in Noida, which saw a 4% fall due to fresh supply along with the existing vacant stock.