Corporate Real Estate Sees Muted Absorption In Jan-Mar
The occupancy of corporate real estate in India for the first quarter has been muted on the leasing front as most occupiers were seen strategizing their plans for the year, with only a few transactions closed during the quarter
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Real estate1_Tribhuwan Sharma
The absorption or the occupancy of corporate real estate in India for the first quarter (Jan-Mar) of 2016 has been muted on the leasing front as most occupiers were seen strategizing their plans for the year, with only a few transactions closed during the quarter.
The first quarter witnessed an overall absorption of approximately 5 million sq ft of office space, a drop of more than 58 per cent on quarter. The National Capital Region (NCR) led the leasing activity during the period, with a share of 31 per cent of the overall space take-up in the leading cities, followed by Mumbai (23 per cent) and Bengaluru (17 per cent), according to commercial real estate services firm CBRE.
However, the overall demand for prime corporate real estate, also referred to as CRE, in India has witnessed an annual increase of 17 per cent to 38 million sq ft in 2015 from 32 million sq ft in the previous year. Last year, the top 7 cities in India witnessed a record absorption of 38 million sq ft, as per CBRE. The total corporate real estate covers approximately 485 million sq ft as on March 2016.
Some of the factors that contributed to the overall rise in demand are high GDP growth resulting in positive occupier sentiments, occupiers being driven by the need for consolidation/expansion resulting in increased leasing activity, and low labor costs driving global companies to locate in India, said Ram T. Chandnani, MD India, CBRE.
The much awaited Real Estate (Regulation and Development) Act, 2016 which came into force on May 1, 2016, is also expected to bring in more transparency into the system. The Act mandates setting up of real estate regulatory authorities (RERAs) and real estate appellate tribunals in all states and union territories (except Jammu & Kashmir) within 1 year of its notification.
Sanjay Dutt, managing director at Cushman and Wakefield real estate advisors said that all states are expected to adhere to the real estate act within the timelines and Maharashtra and Telangana are leading.
The third annual event by the India chapter of CoreNet Global, an association for corporate real estate, held in Bengaluru on Wednesday (15 June) also highlighted that presence of a large technical talent pool, competitive cost options, and proactive government policies make India the fastest emerging business destination.
“The government’s push for the development of local talent and urban infrastructure through initiatives such as the Smart City program and Make in India have won the confidence of the international business community…” said Bhumesh Gaur, India Chapter co-chair, CoreNet Global.