Office space absorption to grow 18% in 2015: report
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Bengaluru: The demand for office space is set to go up in the top eight cities in India, with Bengaluru at the forefront thanks to the growing start-up ecosystem in the city, says a report by property advisory firm Cushman and Wakefield Inc. that was released on Wednesday. The top eight cities are Ahmedabad, Bengaluru, Chennai, Delhi-NCR, Hyderabad, Kolkata, Mumbai and Pune.
Office space absorption in these cities is set to rise by 18%, compared to last year, to touch 36 million square feet by 2015 end, says the report. The first six months of the calendar year has already recorded a 32% rise over the first half of 2014, taking up 17.9 million square feet of office space.
The growth in office space adoption is happening at a time when the residential sales are weak. It is expected to remain so.
Bengaluru is expected to gobble up 34% of the total demand or 9-12 million sq. ft by the end of 2015. Close on the heels are Delhi-NCR and Mumbai with a likely demand of 6.4-7.1 million sq. ft and 4.8-5.7 million sq. ft, respectively.
In the first half of 2015, Bengaluru witnessed total supply of 5.9 million sq. ft, almost twice the supply infusion witnessed during the same period in 2014. This was led by information technology (IT) and e-commerce companies that have steadily taken up space, similar to last year.
“2015 is expected to be one of the best years for office absorption in recent times propelled by steady growth in the economy and renewed corporate confidence. The absorption trend in the first half was largely driven by the IT/ ITeS, e-commerce and outsourcing companies that are witnessing accelerated growth,” said Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield.
Several start-ups, which are in growth mode, will create considerable demand, helping office space absorption to remain strong, Dutt said.
By the end of the year, the sector will witness an addition of approximately 43 million sq ft of office space—42% of this supply has already come in by June. The overall supply is expected to increase by 24% from last year.
Kolkata is likely to see a rise in supply by at least five times compared with 2014. Pune will witness over twice the supply and Chennai a 26% increase, the report said. Except Hyderabad and Mumbai, other cities will see positive growth in supply in 2014.