Commercial real estate segment to remain subdued: CBRE
Dec 04, 2013
Source : The Economic Times


DELHI: Demand for commercial real estate is likely to remain subdued in the medium term as corporates continue to be in a consolidation mode while excess supply may put pressure on capital and rental values, property consultant CBRE said today.

The economic downturn has subdued office and retail markets that has affected sales and put pressure on capital values as well across major cities, CBRE South Asia Chairman and Managing Director Anshuman Magazine said in a statement.

In residential segment, he said the buyer sentiments have remained largely cautious due to relatively high price points and sticky borrowing costs, amid an uncertain economic climate.

He said that investment has slowed considerably across segments resulting in weaker construction activity in most cities.

Giving the outlook, Magazine said: "Against the current economic and political backdrop, demand for commercial real estate is likely to remain subdued in the medium term".

"Corporates are expected to continue their focus on optimal space utilisation and cost cutting measures, and transaction activity is expected to be mainly restricted to take up of small and medium sized space," he said.

Magazine was also of the view that supply backlogs could exert pressure on rental and capital values as well.

He, however, said that recent indications of revival in the global and domestic economy should contribute to better performance and improved economic prospects towards H2 2014.

In the office space segment, CBRE said the demand declined during the third quarter of 2013, because corporates focused on consolidating and downsizing their space portfolios, and/or relocating to peripheral markets.

Office space absorption in the top seven cities fell by about 14 per cent in July-September of 2013 at over 6 million sq ft compared to over 7 million sq ft in previous quarter.

Absorption of prime office space in full 2012 calendar year of top seven cities stood at over 25 million sq ft, while total absorption is over 19 million sq ft in the first three quarters of 2013, according to CBRE.

While subdued demand and high vacancy levels have led to rental stability in most markets in recent months, CBRE said weak absorption numbers has resulted in a decline in office space supply over previous quarters, weighing in on future investment plan.

To boost commercial real estate segment, Magazine pitched for reforms in areas like slow project approval processes, supply bottlenecks, opening up key sectors like retail to FDI, and infrastructure creation through PPP projects.

"Looking beyond the results of the upcoming General Elections in April 2014, the economy will not only need a clearly defined vision and competent economic management, but will also require proactive, industry-centric decision making along with sweeping reforms in a number of areas to drive faster growth," he said.








Latest Realty News

Road to evolution of Pune
Dec 04, 2013
PUNE: Pune has an advantage by virtue of the fact that it has been able to add to its borders by means of surrounding villages. This has served to decrease the pressure on the central city and encouraged an outward growth pattern. However, there are challenges related to Pune’s infrastructure, particularly its road network and these have more to do with the speed of this growth. While there are various proposals for road widening, these have to be translated into real time, to be effective, as i
Low prices pushing demand in new Ranip at Ahmedabad
Dec 04, 2013
AHMEDABAD: Ahmedabad is the financial capital of Gujarat. It is developing fast and it has already proved its worth in fields of business and economic activities. The city houses a large number of small, medium and large scale industries. Many MNCs and major Indian companies have set up their manufacturing units as well as corporate offices in the city. In addition, the fast growing IT industry has also created good number of job opportunities and as a result, there is huge influx of people in t
RBI pushes more liquidity into the banking system
Dec 04, 2013
DELHI: The RBI cut the penal rate of interest, among some of the measures it took recently to push the money market to normal conditions.
Is it time to buy residential property in Mumbai?
Dec 04, 2013
MUMBAI: Here’s good news for those nurturing that elusive dream of owning an apartment in India’s financial capital. Like New York or London or any other blue chip market, Mumbai has thus far remained largely unscathed by a correction in real estate prices. And so, despite a pile up in inventory, a large pull back in demand, plummeting new launches and deteriorating finances of property developers, prices haven’t really come down. But now there are signs of a softening of prices according to a r
AMC wants registration of builders
Dec 04, 2013
AHMEDABAD: Just like architects, engineers and structural designers have to be registered with the Ahmedabad Municipal Corporation (AMC), the civic body has demanded the same for real estate developers.
Hike in TDR prices takes the Mumbai market by surprize
Dec 04, 2013
MUMBAI: The real estate market in Mumbai has been going through ups and downs since the past five years. However, the segment received a major jolt due to the recent spike in transfer of development right (TDR), a move which has been received by the suburban developers with great caution and even disappointment. TDR plays an important role, at least in the suburbs of Mumbai. Ram Raheja, director and head-design and architecture, S Raheja, says, “TDR is an important component for builders redevel
Realtors keen on getting projects rated: Crisil
Dec 04, 2013
KOCHI: Several real estate developers are showing interest in partnering with Crisil Ratings to obtain certification prior to showcasing their projects before customers, Sachin Nigam, Senior Director – SME Ratings, Crisil Ltd, has said.
‘Development of Kolkata will be around areas near Metro’
Dec 04, 2013
KOLKATA: Future development of the city will mostly be centred on routes nearest to the Metro Railway, CREDAI Bengal President Harsh Vardhan Patodia said here on Tuesday.
‘Real estate sector has huge potential’
Dec 04, 2013
BHUBANESWAR: Focusing on increasing the potential of the housing sector in the country, the Confederation of Real Estate Developers’ Association of India (Credai) will hold a two-day national conclave with the theme ‘Housing the game changer: Leading to double-digit GDP growth’ in New Delhi from December 13.
Slowdown in commercial real estate likely to continue
Dec 04, 2013
DELHI: The economic downturn has subdued office and retail markets, resulting in a sales slowdown as well as pressurized capital values across leading cities—according to CBRE Research's year-to-date coverage of trends in India's real estate sector. Buyer sentiments in the housing market have remained largely cautious because of relatively high price points and sticky borrowing costs, amid an uncertain economic climate. As a result, investment has slowed considerably across segments, resulting i

Latest Realty News Of State

Realty Talk's