4 India Office Market Overview (continued)
4.1 Supply Trend
In CY2015, supply additions increased across the leading cities, with Bangalore (36%) and Delhi NCR (24%) constituting
a majority share in overall development completions reported during the year. The Southern cities of Bangalore, Chennai
and Hyderabad contributed approximately 55% of the supply infusion witnessed during the year. Commercial (non-IT)
office space contributed to approximately 65% of the completed stock during the year, while approximately 22% of supply
was concentrated in the SEZ segment. Sustained occupier demand and pent up supply led to a concentration of newly
completed projects in the secondary/peripheral locations of most cities.
4.2 Absorption Trend
Based on historic absorption figures tracked by CBRE, the overall office space absorption during CY2015 was the
highest on record. Demand for office space is limited to the leading office hubs of Delhi-NCR, Mumbai and Bangalore;
the Southern cities of Bangalore, Hyderabad and Chennai accounting for approximately 55% of the absorption during
CY2015. IT/ITES, banking and financial services and engineering sectors continued to drive demand for corporate office
space across leading cities in CY2015. However, the e-Commerce segment also accounted for significant corporate
office space take-up during the year. The October-December 2015 quarter witnessed office absorption of approximately
12 million sq ft (share of southern cities 58%) vis-ид-vis approximately 9.7 million sq ft witnessed in the previous quarter.
The year saw a few instances of occupiers purchasing their own office spaces, mainly in Bangalore and Mumbai. This
has been a good indicator of multi-national corporations reiterating their faith in the Indian economy. Rental values
of corporate real estate across key micro-markets such as Bangalore CBD (13-15%), Bangalore ORR (15-16%), initial
stretches of Chennai OMR (18-20%), Gurgaon Cybercity (IT SEZ: 21-22%, IT Non-SEZ: 17-18%), etc. in the leading cities
saw a significant y-o-y increase due to non-availability of quality ready-to-move-in office spaces.
4.3 Vacancy Trend
As the southern cities of Bangalore, Chennai and Hyderabad accounted for maximum share in office space absorption, the
resultant impact was visible in vacancy trends for the respective cities in CY2015. Vacancy levels in Bangalore declined from
18% in CY2014 to 15% in CY2015. Similarly vacancy levels in Chennai declined from 17% in CY2014 to 15% in CY2015.
The vacancy levels in Hyderabad remained constant at 17%, as the impact of absorption on vacancy was offset by a higher
fresh supply added to the city stock in CY2015.
Supply and Absorption Across Key Leading Cities In CY2015
Area (million sq ft)
Vacancy (%)
Kolkata
16
14
12
10
8
6
4
2
0
30
25
20
15
10
5
0
NCR
Mumbai
Bangalore
Hyderabad
Chennai
Pune
Vacancy (%)
Supply
Absorption
Source: CBRE Research
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ASCENDAS india trust ANNUAL REPORT
2015/2016
