SEO Version
Independent market review
By CBRE South Asia Pvt. Ltd
Offce Market Overview
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Weak global economic outlook, increased vacant space and, appreciating input costs led to a decline in overall supply of offce
space in the leading cities of the country. Offce space supply was down by approximately 45% over the previous year, while
absorption witnessed a marginal increase (growth impacted by delays in expansion plans of occupiers and transaction
closures). Offce space supply and absorption was recorded at 30.0 million sq ft and 33.0 million sq ft respectively, for the
full year 2011 in the seven key cities in India.
•
The southern cities of Bangalore, Chennai and Hyderabad account for close to half of the country’s cumulative commercial
supply and absorption as of year 2011 and continue to retain their position as preferred IT/ITeS destinations.
•
Vacancy levels at a city level remain low in Hyderabad and Mumbai with signifcant vacancies witnessed in NCR, Bangalore
and Chennai.
•
Growing signifcance of SEZ space has resulted in a sharp increase in its absorption and accounted for over 50% of space
absorption during years 2010 and 2011.
•
Several investment sale transactions were witnessed in the commercial real estate sector during year 2011.
From a developer’s perspective, rising borrowing costs and tight project fnancing have driven institutional
investment in developments. From an investor’s perspective, attractive yields and relaxation of policies have generated
increased interest for this segment.
•
For year 2012, the IT/ITeS segment is expected to witness supply pressures, with demand not being able to match new
supply addition, which may have an adverse impact on rental values in this segment. Rental values are expected to remain
under pressure in supply laden suburbs with developers turning increasingly fexible on rents, while maintaining stability in
prime city centers of most major cities. Further, for year 2012, offce space leasing in the southern cities of Bangalore,
Chennai and Hyderabad are expected to continue to maintain the momentum witnessed in year 2011.
Refer to the appendix for the full independent market research report.
38 POSITIONED FOR GROWTH
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