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Indian Real Estate News : Bangalore
Bangalore has highest commercial space absorption in India
Source: economictimes.indiatimes.com Jan 12, 2012
There has been a surge in absorption of commercial space by eight per cent over the previous year at 35.5 million sq. ft. during last year across the country, according to global real estate consultants Cushman and Wakefield.

On the other hand there has been a decline of over 20 percent in total supply entering into the market in 2011 over last year. This has helped marginally reduce the demand to supply gap in the office market, however the overall vacancy is still as high as 18%.

Bangalore continued to top the charts with the highest absorption in the country at 11.53 million sq.ft. along with additional pre commitments of 5 million sq. ft for next year. Chennai and NCR have also witnessed a considerable growth in the space take up during the year accounting for 32 percent and 15 percent respectively compared to the previous year.

According to Anurag Mathur, Managing Director, Cushman & Wakefield India said "2011 has seen some interesting patterns of growth and improvement over the previous year. However, the subdued sentiments in the second half of the year may appear to be counter intuitive to the continued growth activities led by the engineering, healthcare and infrastructure sectors. Though the first half of 2011 was witness to dynamic leasing activities, the second half was more restrained. This highlights that the growing domestic need for economic push seem to have had an effect. One should also be mindful of the fact that the absorption could have been higher had several corporations not deferred their expansion plans in the second half of the year, in the light of weakening economic sentiments in the western markets. IT/ITeS and BFSI sectors, which are the key demand drivers and have the significant share of the absorption, have seen a clear slowdown in expansion plans, thereby affecting the demand. The Non IT absorption, on the other hand, has registered a 30% growth adding to the positive demand. It may be noted that despite the impending uncertainty on the back of weak global cues, the growth in emerging economies is still expected to be 7% or more, which continues to drive the absorption in difficult times".

The total office space supply was recorded at 34.63 million sq.ft., most of which was delivered in the first two quarters of the year. The total amount was lower by approximately 20% of the anticipated supply. SEZ projects account for nearly 25 percent of the total supply across major cities barring NCR and Ahmedabad. SEZs have attracted substantial pre commitments across all cities and the trend is likely to continue into 2012.

The decline in supply as against the anticipated can be attributed to a large pipeline of projects under construction coupled with lower pre-commitments in the latter part of the year, based on a fear of uncertain economic scenario in the next 12-24 months. This has certainly been a factor in making the developers adopt a cautious approach. The developer, in such a scenario, will usually be keen to guard against possible erosion of rents.

Rentals across most micro markets remained stable for the most part during 2011with a few exceptions such as Mumbai CBD (14% drop) and Peripheral ORR micro market (11% increase) in Bangalore.

In Bangalore the peripheral micro market of Whitefield and Electronics City accounted for a significant share of the total absorption of approximately 11.5 million sq. ft. Pre-commitments were also on the higher side at approximately 5 million sq.ft. Rentals mostly remained stabilised across all micro markets to retain and capitalise on the enquiries. The vacancy levels in the city registered a decline to approx. 13% as on 4Q 2011 from 16% last year on account of healthy absorption levels coupled with constricted infusion of supply. Supply remained subdued during the first half of the year; however, the last two quarters showed increase, with new completions totalling to approximately 4.46 million sq. ft for the year 2011.

Tag: Real estates in bangalore, Bangalore property
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