According to a survey by Cushman & Wakefield, the net absorption of office space in 2017 dropped by seven per cent to 30.57 million sq ft, as compared to 32.85 million sq ft in 2016. The total supply also dropped by 11 per cent to 32.20 million sq ft, as against 36.34 million sq ft in 2016. Nevertheless, the outlook remains positive, growing investor confidence in India’s growth story, says the report.
“Office leasing trends have been positive in the second half of 2017, as global and national uncertainties settled. By the second half, it was clear that the impact of events such as Brexit, US Fed rate revisions, GST implementation and RERA, were going to be minimum on the growth of the commercial real estate sector of the country,” Cushman & Wakefield country head and MD, India, Anshul Jain said. Even while the GDP growth showed a drop in the mid-quarters, the outlook for India’s GDP growth is positive, giving a further boost to corporates, to carry on with their growth plans, he added.
There were more than 50 large leasing transactions, which were over 1,00,000 sq ft each, constituting over 11.5 million sq ft, in 2017, showing a healthy trend of growth in the corporations. “The trend of large deals has been gathering steam, as many companies are in rapid expansion mode. They are seeing a strong long-term potential in India’s growth story,” the report said.
Cities like Chennai, Pune and Mumbai recorded growth of 38 per cent, 18 per cent and nine per cent, respectively, in leasing activity, while Bengaluru witnessed a decline of nearly 30 per cent, as compared to 2016, mainly due to low supply. Kolkata, on the other hand, recorded the highest growth in incremental supply, growing at 180 per cent, adding 2.7 million sq ft to its current stock in the year. Coupled with low rents, Kolkata offers interesting opportunities to occupiers for expansion, it said. Hyderabad witnessed over 10 large deals concluded in 2017, with one of them being over 1.4 million sq ft, leased by a global consulting services major, the report said.
“India’s focus on creating an attractive and lucrative business environment, has created significant impact. With its rise in position in the ‘ease of doing business’, investor confidence is set to grow,” Jain said. He further noted that with various strategic government programmes such as ‘Make in India’ and ‘Start Up India’, there is a clear focus on long-term stability of the Indian economy. “We expect these positive developments to create a very strong base for office space growth in the next two to three years,” Jain added.