Pune, 19th July, 2019: CBRE South Asia Pvt. Ltd, India’s leading real estate consulting firm, today announced the findings of its latest India Office MarketView – Q2 2019 report. According to the CBRE report, the city witnessed an increase in development completions on a quarterly basis in the form of a medium-sized non-IT development in SBD East, along with a medium-sized SEZ development in SBD Kharadi.
Anuj Dhody, Associate Executive Director, Advisory & Transaction Services, India, CBRE South Asia Pvt., Ltd. said, “Owing to supply influx and culmination of pre-commitments in SBD Kharadi, space take-up rose on a quarterly basis and was driven by a healthy mix of primary and secondary leasing. Transaction activity was mainly concentrated across SEZ developments in SBD Kharadi and PBD Hinjewadi.”
Tech firms continued to dominate space take-up, followed by BFSI companies and flexible space operators. Small- to medium-sized (less than 50,000 sq. ft.) transactions drove leasing activity. The city also witnessed the closure of a few large-sized deals (greater than 100,000 sq. ft.) in non-IT and SEZ developments.
Commenting on the findings of the report, Ram Chandnani, Managing Director, Advisory & Transaction Services, India, CBRE South Asia Pvt. Ltd. said: “Strong demand continued and quarterly increase in rental values was reported across most micro-markets owing to limited space availability across the city.”
Limited availability of space and sustained leasing momentum led to an increase in rental values by about 1-8% q-o-q across non-IT developments in SBD West and SBD Kharadi and by about 3-6% q-o-q across IT developments in CBD, SBD Kharadi and PBD-Others.
In the second quarter of 2019, overall gross leasing in the country touched 17.0 million sq. ft., recording a marginal growth of 14 percent on a quarterly basis.
In 2019, the impact of technology’s disruptive changes will be clearly visible, with stakeholders undertaking various measures to counteract them, marking a paradigm shift from ‘experimentation’ to ‘transformation’. Office leasing activity is expected to strengthen in the short term, backed by corporates seeking to expand or consolidate their operations. Besides American entities, India’s position as a preferred outsourcing destination would continue attracting corporates from other geographies such as EMEA and APAC.
Further, BFSI, engineering & manufacturing, research and consulting, and flexible space corporates are also likely to account for a larger share in annual leasing activity. Pharmaceuticals, telecom and e-commerce are also likely to report higher occupier demand, driving demand for commercial space. Given the strong leasing activity already witnessed in H1 2019, by 2019 end the leasing quantum could potentially surpass the previous peak of 2018 by about 5-10% on an annual basis.
Supply completions mainly in peripheral/suburban micro-markets
The H2 2019 pipeline is expected to be marginally lower vis-à-vis the first half of 2019, dominated by Bangalore and Hyderabad where supply is anticipated to outstrip NCR and Mumbai. Chennai and Pune are likely to see the completion of large-scale tech parks/corporate developments by leading players.