MUMBAI: The prime office space segment across key cities in India witnessed a supply infusion of more than 20 million sqft in the first six months of 2013.
According to the findings of CBRE's latest report, India Office Market View Q2 2013, supply of prime office space across key cities in India witnessed a 16% increase year on year and an 8% increase on a quarter on quarter basis.
Around 10.8 million sqft of new supply entered the market in Q2 2013; while Q1 2013 witnessed around 9.9 mn sq.ft. of fresh supply addition. This supply was primarily from large commercial and SEZ developments which were completed in leading markets such as Bangalore, Mumbai, NCR ( National Capital Region) and Pune.
Approximately 7 mn sq.ft of space was absorbed in this quarter as against 6.6 mn sq.ft in the previous quarter. However, downward pressures continued to persist as absorption was down by about 6% when compared to the same period last year. The first half of 2013 witnessed a total of about 14 mn sq. ft of space getting absorbed across all leading cities.
Transaction activity in Q2 2013 was dominated by NCR, Mumbai, Bangalore and Pune, representing about 88% of the total transacted space during the quarter. Occupier focus continued to be on consolidation and more efficient use of their existing portfolio. Although well positioned assets continued to attract occupier interest, transactions continued to take much longer to conclude.
Supply pressures continued to dictate rental movement with a clear segregation of micro markets in terms of rental behaviour across leading cities. Rents were either stable or appreciated marginally in demand driven micro-markets such as Connaught Place, Gurgaon, BandraKurla Complex, Lower Parel and Outer Ring Road. Rental sentiments in supply driven micro-markets such as Thane, Navi Mumbai, Powai and Vikhroli were on a downward trajectory.