Volatility on India’s financial markets also had an impact as take-up of Grade A office space suffered in Delhi, Mumbai, Chennai, Bangalore, Hyderabad, Pune and Kolkata, according to a report on the subject from CB Richard Ellis.
The international property group said that more than five million square feet of Grade A office space came onto the market in the relevant areas between July and September 2011, a figure almost 50 per cent below that of the previous quarter.
From the point of view of absorption rates within the Indian office market, the data points to a quarterly decline from eight to five million on a quarterly basis, CBRE India said.
“The slowdown in office space take-up is indicative of the global corporate sector sentiment affecting the Indian office property Market,” said Anshuman Magazine, CBRE’s chairman and managing director in South Asia.
“The decline in absorption levels is further reflected in the slowdown in rental growth across key micro markets in the country. Over the next few months I expect supply dynamics will dictate the rental movement, especially in the CBD,” he added.
Rental values on offices in India’s primary business centres will stagnate in the coming months as supply and demand pressures balance out, CBRE’s report said. Supply arriving on the Indian office market was primarily located in the cities of Delhi, Bangalore, Pune and Hyderabad in the most recent quarter, it said.
Editor’s notes:
In Q1 2023, there was 1.3 million square feet of gross absorption in Mumbai representing a 32% year-on-year decrease but an 8% quarter-on-quarter increase.
In Delhi and the Indian National Capital Region (NCR), in Q1 of 2023, there was 3.4 million square feet of gross absorption in the same quarter and this represented a 26% year-on-year increase and was the same level as the previous quarter.
In the whole of 2022, in Bengaluru (Bangalore), there was 17.3 million square feet of gross absorption. This was a 17 per cent decrease compared to the previous year.
In Chennai, there was 7.3 million square feet of gross absorption representing a 44 per cent increase compared to 2021.
In Delhi-NCR, for the whole of 2022, there was 11.3 million square feet of gross absorption representing a 46 per cent increase on the previous year.
In Hyderabad, there was 5.8 million square feet of gross absorption representing a 2 per cent increase on the previous year.
In Mumbai, there was 6.7 million square feet of gross absorption representing a 46 per cent increase compared to 2021.
And in Pune, there was 6.4 million square feet of gross absorption representing a 121 per cent increase on the previous year.