MUMBAI: About 2.4 million sq ft (msf) of office space was absorbed in Mumbai in the first half (H1), (January-June), the highest across India, according to a new data released by global property consultant Cushman & Wakefield (C&W) on Monday. But this absorption was still 10% less compared to the first half of 2012.
The financial capital witnessed a net absorption of 1.62 msf, an increase of 16% from the same quarter last year and twice the previous quarter.
Office markets in India on the other hand, registered a downward trend in absorption in the first half of the year, said the report. The total net absorption across top eight cities in H1 2013 was 10.9 msf, which denoted a 15% decline compared to the same period last year.
In Mumbai, supply during H1 2013 witnessed a decline of 7% compared to the H1 2012. “However, supply during the quarter stood at 2.2 msf, a 46% increase compared to the previous quarter, as the city witnessed fresh infusion of SEZ supply in Andheri and Thane-Belapur Road. The high supply resulted in Grade-A vacancy to increase to 22.1%,” the data stated.
The only locations to record some changes in rentals were Powai, where rentals appreciated by 6% due to low availabilities, and Worli, which registered a decline by 4% with landlords reducing rentals to induce tenants. “With quality developments available at attractive pricing, investor interests in commercial office developments have increased with a few significant deals in the pipeline,” the report said.
According to C&W, slower economic growth led to the decline in expansion by companies as cautious sentiments continued since the beginning of the year. While skepticism was very apparent in the first quarter of the year, the second quarter saw a marked improvement in total office space absorption.
During H1 2013, Bangalore and Pune followed Mumbai at 1.8 msf and 1.7 msf, respectively. Though Bangalore saw a decline of 22% in net absorption compared to the previous year, it witnessed a seven-fold increase in absorption in Q2 2013 compared to the last quarter. Chennai and Pune recorded positive growth in net absorption in H1 2013 by 6% and 37%, respectively.
Kolkata was down by 52%, while NCR declined by 42%, followed by Ahmedabad at 21%—registering the highest decline in absorption at 0.49 msf, 1.42 msf and 0.27 msf, respectively.