There is some good news for commercial real estate developers as the office space absorption rose by 16 % during the first six months of this year. The property consultant Cushman & Wakefield (C & W) in a report mentioned that about 13.4 million square feet of office space in eight major cities were absorbed this year as corporates are looking to expand on improved market sentiments.
Now, this data is something the real estate companies need to look at. The office space supply declined by 7 % during January-June 2014 in Delhi-NCR, Mumbai, Kolkata, Chennai, Bangalore, Pune, Hyderabad and Ahmedabad as compared with the year-ago period. Hence before getting into a spree of constructing more office space, the developers need to do proper due diligence.
C&W in the report also mentioned that the total net office space absorption recorded a 16 % increase across the top eight cities in the first half of 2014 (January-June) compared to the same period last year. The total net absorption for H1 2014 was recorded at 13.4 million square feet.
During H1 2014 the top three performing cities were Bangalore, Delhi-NCR, and Hyderabad, representing 57 % of the total net absorption. All the cities except Kolkata, Mumbai, and Pune recorded a year-on-year (Y-o-Y) increase in net absorption.
Net absorption in Mumbai was lower by 22 % in H1 2014 as compared to the same period last year. This may be due to the exorbitant property rates and the corporates now have other options in tier 2 cities like Ahmedabad, Vadodara, and Nagpur, etc.
Kolkata and Pune saw a dip of 36 % and 17 %, respectively, during the period under review.