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23% YoY increase in the gross office take-up in India

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News Point: An absorption of 11.4 million sq ft recorded in Q1 2018. Flexible workspace operators gain momentum in 2018, accounting for 13% of pan-India leasing volume, finds Colliers Research

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India PropertyThe first quarter of 2018 has started on a positive note with a 23% YoY increase in the gross office take-up in India. As per Colliers International, approximately 11.4 million sq ft (1.02 million sq m) of gross absorption was recorded in Q1 2018.

Bengaluru (Bangalore) continued to account for the highest share of absorption at 34%, followed by the National Capital Region (NCR) at 26%, Pune at 16%, Mumbai at 10%, Chennai at 9%, Hyderabad at 4% and Kolkata at 1%.

“The technology and finance sectors remained the major contributors to office demand across Indian cities with 36% and 17% shares respectively of the total office take-up in Q1 2018. In line with our earlier forecasts, demand from flexible workspace operators and the manufacturing sector has started gaining momentum in 2018, accounting for 13% and 12% respectively of pan-Indian leasing volume. We foresee demand for flexible workspaces further increasing over the coming years”, said Ritesh Sachdev, Senior Executive Director, Occupier Services at Colliers International India.

Bengaluru 

Office leasing momentum in Q1 2018 remained robust driven by primarily by expansions. Bengaluru’s total absorption in Q1 2018 stood at 3.9 million sq ft, up by 7% YoY. Colliers expects the absorption to pick up pace in the coming quarters as various medium-to-large sized transactions should be concluded in 2018.

Demand should remain robust in the long-term, driven by the availability of a huge talent pool. We forecast about 35-40 million sq ft of gross absorption over 2018-2020. ORR remained the epicentre of the office market with a 44% share of total office leasing volume followed by the Secondary Business District (SBD) on 12%, Whitefield on 11%, the Central Business District (CBD) on 11%, North Bengaluru on 10% and other locations (12%).  

In line with earlier prediction by Colliers, flexible workspace continued to flourish due to high demand in the CBD and Off-CBD areas. We expect the trend to pick up due to lower vacancy levels in strategic locations such as the CBD, Off-CBD and SBD areas.

NCR

NCR accounted for 26% of the total office absorption pie in India, next to Bengaluru at ~2.99 million sq ft in Q1, 2018.

Gurgaon

Demand for office space has regained momentum and the overall gross office uptake stood at 1.72 million sq ft (0.16 million sq m) in Q1 2018. Expansionary office space requirements primarily drove the leasing demand. Occupiers’ interest remained tilted towards Grade A buildings.

However, occupiers were exploring options in Off-CBD micromarkets such as Sohna Road and Golf Course Extension Road to consolidate and optimise their real estate portfolio.

Delhi 

Leasing activity remained subdued during Q1 2018, as only 0.26 million sq ft of gross absorption was recorded marking a 21% decline YoY. The reduction in the absorption levels can be attributed to the limited Grade A space in key micro markets like the CBD and Aerocity as well as higher rents in Grade A and well-located buildings. 

NOIDA 

The NOIDA commercial market witnessed a spike in occupier interest during Q1 2018. The market recorded about 1.01 million sq ft of gross absorption which was almost double than the Q1 2017 absorption levels.

NOIDA continues to be a favoured destination amongst technology occupiers accounting for 25% of total absorption, followed by financial sector at 20%, engineering and manufacturing sector, with 19% and the healthcare & pharma sector accounting for 8%.

Pune 

Although the Pune office market has seen low vacancy since 2017, the city recorded about 1.8 million sq ft of gross office absorption in Q1 2018. This is an increase of about 131% in gross absorption YoY. About 57% of total leasing was concentrated in SEZs, driven by a couple of transactions larger than 100,000 sq ft.

Colliers expects Kharadi and Hinjewadi to remain the most popular locations among occupiers. As per Colliers Research, new supply should continue to entice technology occupiers’ focus towards micro markets, such as Kharadi and Hinjewadi in the next three years.

Mumbai

Gross absorption in Q1 2018 amounted to 1.1 million sq ft in Mumbai. Although about 37% YoY decline was noted in absorption, Colliers witnessed several high-value outright purchases indicating continued investor confidence in the Mumbai office market. Notable transactions included the purchase of 60,000 sq ft (5,575 sq m) by Manappuram Finance in Wallstreet in Andheri. Also, Mahindra & Mahindra purchased two floors in Worli-based Mahindra Towers.

The demand was driven by the financial sector, accounting for about 28% of the gross absorption followed by flexible workspace on 19%, engineering and manufacturing on 14%, healthcare on 13% and others on 26%.

Chennai

In Q1 2018, Chennai recorded about 1 million sq ft of gross office leasing, a similar trend to that seen in Q1 2017. While office demand in Chennai was driven by relocations and expansion in 2017, Q1 2018 witnessed an increase in the number of new entrants from the IT-ITeS, BFSI and automobile sectors.  

Many market entrants have taken space in new Grade A buildings in micro markets such as OMR post-toll, MPH Road and Off CBD. Special Economic Zones (SEZs) in the city’s south and west precincts retained consistent traction due to high demand.

Hyderabad

In Q1 2018, the gross absorption was recorded as 0.5 million sq ft, almost the same as in Q1 2017. The SBD micro market remained the preferred location among occupiers and grabbed the maximum share of about 91% in total office leasing in Q1 2018. Other micro markets such as the Central Business District (CBD) and Off-CBD accounted for a 5% and a 3% share of total leasing respectively.

Due to continuous expansion by Information Technology and Information Technology Enabled Services (IT-ITeS) companies, the sector contributed about 62% of the total office demand in Q1 2018. Flexible workspace operators such as Table Space, Isprout and Workafella accounted for about 35% of total office absorption.

Kolkata 

In Q1 2018, Kolkata’s office market maintained the status quo with 0.2 million sq ft of gross absorption, like absorption in Q4 2017. We observed a marginal improvement in enquiries mostly by domestic occupiers for their expansion requirements. Occupier demand was largely driven by relocations and expansion in the peripheral areas. 

The bulk of leasing volume, 60%, was concentrated in Sector V while New Town and Rajarhat accounted for a 36% share. The remaining 4% of the transaction volume was observed in CBD locations.

Although more than 30.0 million sq ft (2.7 million sq m) of Grade A supply is scheduled for completion in 2018; in our opinion, developers should adhere to the planned timelines to maximise the benefit of the present supply crunch in technology-driven cities. Developers should gear up to build future-proof buildings with up-to-date amenities and maximum technology intervention to command premium rents.

“We advise large occupiers looking for state-of-the-art buildings with modern amenities and facilities for their employees to pre-commit in advance, especially in low vacancy markets such as Bengaluru, Pune and Hyderabad,” says Surabhi Arora, Senior Associate Director, Research at Colliers International India.

More than 40 million sq ft of multi-tenanted IT SEZ space to completion by 2020

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Bottom Line: SEZs represent about 25% of the total multi-tenanted Grade A office stock in India, says Colliers Research.

IT SEZ, IT SEZ in India, Future of IRT SEZ in India, Commercial real estate in India, Realities of IT SEZ in India, IT SEZ Report Card, Investment in IT SEZ, India real estate news, Indian realty news, Real estate news India, Indian property market news, Track2RealtyThe uncertainty regarding the continuity of fiscal incentives is an area of growing concern among various stakeholders of Special Economic Zones (SEZs). Although, more than 40.0 million sq ft of new supply is scheduled for completion by 2020, which is currently mandatory to qualify for the companies to get income tax benefits in SEZs, it seems unlikely for all the projects to complete construction by then.

“Over the past few years, SEZ developments in India have gained popularity especially among the technology sector occupiers besides traditional sectors such as electronics, gems and jewellery. Bengaluru, the technology capital, accounts for a maximum share of multi-tenanted SEZ space (39%) followed by Hyderabad and National Capital Region (NCR) 14% each, Chennai (13%), Pune (12%), Mumbai (5%) and Kolkata (3%). Besides, a couple of Tier II cities such as Coimbatore, Jaipur, Kochi, Chandigarh and Visakhapatnam also have a few operational SEZs. Most of the multi-tenanted SEZs have a low vacancy level ranging from 4% to 10%, which indicates the popularity of these SEZs among occupiers”, said Ritesh Sachdev, Senior Executive Director, Occupier Services at Colliers International India.

Surabhi Arora, Senior Associate Director, Research at Colliers International India added, “regardless of optimism among the stakeholders about a further extension of income tax benefits, until this is certain, developers should schedule the completion of construction three to six months in advance. We advise first-time entrants looking for direct tax benefits should only pre-commit spaces in projects that are in advanced stages of construction, to avoid last-minute delays in starting operations which may lead to disqualification for direct tax benefits. Existing occupiers looking for expansion should let developers know in advance to ease them in planning the further developments”.

As per Colliers Research, more than 40 million sq ft of SEZ space is under various stages of construction currently. Most of the new supply is concentrated in NCR and southern cities such as Bengaluru, Chennai and Hyderabad. 

Bengaluru:

The Silicon Valley of India shares the maximum of about 39% of the total IT SEZ supply in India. Most of the SEZs are strategically located in preferred IT destinations such as Outer Ring Road (ORR) and Whitefield accounting 71% and 16% share respectively of the total SEZ stock in Bengaluru, while a few can also be spotted at North Bengaluru and Mysore Road.

Although, SEZs share about 38% of the total office space absorption in Bengaluru in last three years, we saw a minimal inflow of new entrants in SEZs in 2017. The demand was primarily driven by the occupiers looking to relocate or expand their existing operations in SEZs. In our opinion, the lack of SEZ supply and low vacancy levels (5.3%) were the primary reason for the drop of new entrants.

As per Colliers Research, the city is likely to add about 9.7 million sq ft of SEZ space by 2020. Besides this, approximately 9.0 million sq ft is in the planning stage. Most of the new supply is concentrated in existing SEZs in ORR, Whitefield and North Bengaluru. Most of the new supply will be taken up by the existing occupiers looking for expansion as 3.6 million sq ft is already pre-committed.

NCR:

SEZs are only located in satellite cities namely Gurugram and NOIDA. Currently, a consolidated operational stock of about 20.1 million sq ft is distributed across 12 SEZs in both these cities, keeping a lion’s share, Gurugram dominates the market with 72% of National Capital’s SEZ stock. NCR witnessed a stable demand for SEZ office spaces in past 3 years with 1.4 million sq ft of annual absorption.

The city has approximately 9.0 million sq ft of new supply pipeline planned to be developed over next five years. More than 70% of the upcoming supply is concentrated in Gurugram, in micro makets such as Golf Course Extension Road and Sohna Road. NOIDA shares only 30% upcoming supply primarily concentrated at NOIDA Expressway. As per Colliers Research, 6.0 million sq ft is likely to see completion by 2020.

Hyderabad:

Hyderabad has operational multi-tenanted SEZ stock of about 20.0 million sq ft primarily located at Secondary Business District (SBD) with a small presence of SEZs in Peripheral Business District (PBD) micro markets as well. The overall leasing market in Hyderabad has seen remarkable growth in the past three years.

The factors working in favour of Hyderabad are its cheaper rents, occupier-friendly state government policies and robust supply pipeline. While in 2016, SEZs contributed about 49% share in the overall office leasing in the city, the percentage dropped to about 22% of total leasing in 2017. This was primarily due to vacancy level being as low as 3% in SBD micro market.

Nevertheless, about 9.0 million sq ft of SEZ is in various stages of construction in Hyderabad. SBD shares about 96% of the overall new supply. Considering the robust upcoming supply at strategic locations in the next three years, we expect SEZ absorption to increase in the coming years.

Pune:

Pune is predominantly a technology occupier-driven office market. The city houses about seven multi-tenanted SEZ developments and over twenty private SEZ campuses. Nevertheless, the city is slated for new IT SEZ supply of around 3.3 million sq ft by 2020. Most of the upcoming SEZ developments in Pune are located in Kharadi (58%) and Hinjewadi (42%). Besides, there are several SEZ projects with development potential of about 6.0 million sq ft that are stalled as developers do not want to build on a speculative basis.

Chennai:

Chennai has about 19.0 million sq ft of operational SEZs and contributes to 12% share in total IT SEZ stock in India. These SEZs are spread across four key micromarkets namely Old Mahabalipuram Road (OMR) pre-toll, OMR post-toll, Mount Poonamalle High (MPH) Road and the Grand Southern Trunk (GST) Road. SEZs in Chennai are witnessing consistent traction, contributing to more than 35% of total office leasing annually, since 2016.

Prominent developers such as Embassy, DLF, Brigade, Green Grid Group (IG3) and Xander are planning to add more than 8.0 million sq ft (0.8 million sq m) of new supply in the next three years primarily in southern precincts of the city dominated by OMR post-toll (63%).

Mumbai:

Among the key cities in India, Mumbai is relatively a passive SEZ market with only two operational IT SEZs in the city. The total SEZ stock in Mumbai is about 7.3 million sq ft and these operational SEZs are located in Powai and Airoli micromarkets. The city is likely to see an addition of 1.8 million sq ft of new supply in Airoli by 2019.

Kolkata:

Kolkata, the only major city in the eastern part of the country has observed a slow SEZ space leasing trend over the years primarily due to state government’s apprehension in developing SEZs. The total SEZ stock in Kolkata is about 4.0 million sq ft and all of the operational SEZs are situated in the Rajarhat micromarket. Kolkata has an additional under construction supply of 2.7 million sq ft of supply in Rajarhat by 2020.

A few developersare also readyfor built-to-suit optionsin their SEZland located at Rajarhat. The market trend also reveals that technology companies like TCS, Infosys, and Wipro are interested in making their own captive campuses.

10 mn sq ft of office leasing in Q3; gross absorption 29 mn sq ft in YTD Sep 2017

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News Point: Despite slowdown in the overall economy, the office market has continued to perform well in 2017.

Office space in India, Office space absorption, Commercial real estate in India, Commercial property trends, Indian real estate market, Indian property market, India office market report, Real estate news magazine, Real estate news portal, Real estate website, Track2Media Research Pvt Ltd, Track2Realty, NRI investment in IndiaWith about 10 million sq ft (0.9 million sq m) of office leasing in Q3, gross absorption totalled around 28.9 million sq ft (2.7 million sq m) over the first nine months.

Although the number represents a marginal decline of about 1% from last year’s absorption during the same period, we expect leasing momentum to pick up in Q4 2017 and maintain Colliers International’s yearly forecast of more than 40 million sq ft (3.7 million sq m) for 2017.

“As expected, Bengaluru has remained the frontrunner in office leasing with a 31% share of overall demand followed by NCR on 25%, Hyderabad and Chennai on 12% each, Mumbai on 10%, Pune on 8% and Kolkata on 2%. With an 8% share of total leasing volume in Q3 2017, coworking operators are making their presence felt in the market. Overall, the commercial market will remain stable despite the economic slowdown and increasing concern about disruption from artificial intelligence, automation and stringent data security laws”, says Ritesh Sachdev, Senior Executive Director, Occupier Services, Colliers International India. 

While the traditional demand drivers of the Indian office market, technology occupiers, represented 39% of total absorption, Banking, Financial Services and Insurance (BFSI) also formed the bulk of transactions and accounted for 17% of total absorption. On the supply side, 90 million sq ft is under various stages of construction, which would likely to increase the current total stock by 16% in the next 3 years.

“Despite the temporary slowdown in the economy in the aftermath of several major government reforms executed in 2017 office market remained upbeat with increased investor activity, sustained leasing demand from technology companies and growing leasing interest from various industry occupiers like manufacturing, coworking, logistics and warehousing. We expect the commercial real estate market to remain on track with sustained demand from occupiers in short to medium term. Rents are likely to see an upward growth trajectory specially in Grade A buildings; average annual increase of 4-5% over the next three years likely in India across cities”, says Surabhi Arora, Senior Associate Director, Research, Colliers International India. 

Bengaluru

In Q3 2017, Bengaluru witnessed gross absorption of 3.0 million sq ft (0.27 million sq m) indicating a drop of 5% qo-q. However, the city recorded gross absorption of 10.0 million sq ft (0.9 million sq m) over the first nine months, representing a considerable increase of 16.5% from the same period last year.

Chennai

With about 1.23 million sq ft (0.1 million sq m) Q3 gross absorption, Chennai has reached around 3.25 million sq ft (0.28 million sq m) office leasing so far this year, indicating sustained demand. Gross absorption recorded an increase of 7% compared to Q3 2016.

NCR:

“We expect the commercial real estate market for NCR to remain on track with sustained demand from occupiers in short to medium term. Rental values are likely to remain stable across most micro-markets in Gurgaon, with expectation of a slight increase in CBD of Gurgaon. Rental values in Delhi will strengthen further due to consistent demand and limited Grade A stock/supply. Noida continues to be a tenant favorable market given high vacancy levels” added Sanjay Chatrath, Executive Director, NCR at Colliers International India. 

Delhi 

In Q3 2017, total gross leasing volume amounted to 0.26 million sq ft (0.02 million sq m) representing a significant increase of 30% in comparison to Q3 2016.

NOIDA

The market recorded about 0.6 million sq ft (0.05 million sq m) of gross absorption which was 20% up from the previous quarter.

Gurugram 

With 1.58 million sq ft (0.15 million sq m) of gross absorption in Q3, 2017, Gurugram was the most active office market in NCR. Gross absorption over the first nine months accounted to 3.3 million sq ft (0.3 million sq m) which is about 14% up from the same period in 2016. About 30% of the total lease volume was concentrated on Golf Course Road followed by Sohna Road 18%, Cyber City 14%, Golf Course Extension Road 13% and NH8 including Udyog Vihar 16%. MG Road and Institutional sectors represented only 1% and 4%, respectively.

Hyderabad 

Commercial leasing witnessed a drop of about 21% in Q3 2017 with about 1.24 million sq ft (0.12 million sq m) of gross absorption. The YTD absorption is recorded as 3.32 million sq ft (0.31 million sq m).

Kolkata

During Q3 2017, commercial market demand in Kolkata was in line with Q1 and Q2 absorption numbers, leading to a gross absorption of 0.2 million sq ft (18,150 sq m).

Mumbai 

Gross office absorption amounted to only 1.0 million sq ft (0.1 million sq m) in Q3 2017, making it 4.0 million sq ft (0.4 million sq ft) YTD, which is similar to the YTD absorption in the same period last year.

Pune

In Q3 2017, leasing activity gained momentum with 0.82 million sq ft (77,100 sq m) of gross absorption, bringing the total for the first nine months of 2017 to 2.0 million sq ft (0.2 million sq m), a 24% YOY decline.

Bengaluru leads office absorption; gross office take-up reaches 9.5 mn sq ft in Q2 2017

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News Point: Steady demand to continue in H2 2017, upward pressure on rents likely in south cities, finds Colliers Research.

Bangalore office space, JLLM, Jones Lang LaSalle Meghraj, Track2Media, Track2Realty, ravi sinha, india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, KP Singh, DLF, Unitech, Emaar MGF, ndtv.com, ndtv, aajtak, zee news, india news, property news, real estate news, 99acres.com, 99 acres, indianrealtynews.com, indianrealestateforum.comIndiabulls real estate, BSE, Bombay Stock Exchange, Mumbai Real Estate, India Property, Track2Media, Track2Realty, ravi sinha, india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, KP Singh, DLF, Unitech, Emaar MGF, ndtv.com, ndtv, aajtak, zee news, india news, property news, real estate news, 99acres.com, 99 acres, indianrealtynews.com, indianrealestateforum.com, Indiabulls real estate, BSE, Bombay Stock Exchange, Mumbai Real Estate, India PropertyDespite delayed implication of demonetisation and recent layoffs by technology companies, due to automation and changing technology, commercial market continued to remain resilient, backed by sustained expansion plans of the major occupiers. The Gross office take-up in India amounted to 9.6 mn sq ft (882,800 sq m) in Q2 2017 representing a nominal 2% increase Q-o-Q from 9.3 mn sq ft (Total office absorption in H1 2017 stands at ~18.9 mn sq ft, as per Colliers Research marginally down by 2% from, H1 2016)

“Real Estate has seen a series of challenging regulatory impediments in its performances, with demonetization, RERA and now GST. In the post-GST era, service tax (15%) in commercial leases will be replaced with GST at 18%. However, we expect demand to remain steady, with some large activities of consolidations and relocations in Bengaluru, Mumbai, Pune and NCR. Hyderabad witnessed sharp rise in demand from 0.51 million sf to 1.6 million sf QoQ, which is more that double. Overall office demand is expected to see steady rise in take up for next few quarters”, Ravi Ahuja, Executive Director, Office Services & Investment Sales, Colliers International India.

As expected, Bengaluru continued to dominate the office market and recorded an overwhelming share of 34% of total leasing volume, followed by NCR at 19% and Hyderabad at 17%. Mumbai, Chennai, Pune and Kolkata accounted for 13%, 11%, 4%, and 2% respectively, on overall leasing volume.

“Despite, recent layoffs’ alert by technology companies due to automation and changing technology, we expect the commercial market to remain resilient backed by sustained expansion plans of the major occupiers. July onwards, India adopted a multi-tiered Goods and Services tax (GST) structure. Although it will result in marginal increase in occupancy costs, we do not expect any adverse impact on demand. GST implementation should bring operational efficiency and widen the tax base, leading to higher revenues, infrastructure spending and more investment in the country. The influence of recent adoption of the goods and services tax (GST) and increasing interests of investors in warehousing sector should be noticeable events to watch out for in H2 2017”, Surabhi Arora, Senior Associate Director, Research, Colliers International India.

Bengaluru 

With approximately 3.25 million sq ft (0.3 million sq m) of gross absorption, Bengaluru remained the most active office market in India. Although, the q-o-q numbers represent a marginal decrease of about 7% (3.5mn sq ft in Q1 2017) in gross absorption, we expect the leasing momentum to continue in the coming quarters.  About 43% of the total leasing was concentrated in Special Economic Zones driven by a couple of large size (above 100,000 sq ft) transactions.

We expect leasing activity to be dominated by small and mid-size transactions as BTS options are expected to remain the preferred choice among occupiers with large size requirements in prime corridors. Despite a supply pipeline of nearly 3.0 million sq ft (0.3 million sq m) in H2 2017, new occupiers with large size requirements may find it difficult to lock in long-term leases. The small and mid-size occupiers should consider flexible workspaces to leverage on their location and the ease of operation they provide.

Delhi-NCR

NCR recorded gross absorption at 1.8 million sq ft (from 1.57 mn sq ft in Q1 2017), Gurgaon with 50% of total NCR absorption remained the preferred choice among occupiers followed by NOIDA and Delhi that shared about 30% and 20% respectively.

The gross leasing volume in Gurgaon reached about 0.9 mn sq ft (83,612 sq m) marginally up from last quarter numbers. While NOIDA’s commercial market witnessed sustained interest from occupiers in Q2 2017, resulting in absorption of about 0.5 million sq ft (46,400 sq m) of Grade A office space; marginally up from the previous quarter. About 70% of this demand was contributed by the technology sector, including e-commerce and fintech companies. In Delhi, the corporate leasing activity remained stable with gross absorption standing at only about 0.42 million sq ft (39,019 sq m), up by 27% q-o-q.

Hyderabad

Commercial leasing revived with about 1.6 million sq ft (145,300 sq m) of gross absorption in Q2 2017 versus just 0.51 million sq ft (47,300 sq m) gross leasing activity in Q1 2017. Regardless of the anxieties about lay-offs and automation in the technology sector, the industrial sector continued to expand and accounted for 92% of overall office leasing in the city. As per Colliers International, the Central Business District (CBD), off-CBD and PBD micromarkets recorded 5%, 4% and 2% of the remaining share in gross leasing respectively.

Mumbai

In Q2 2017, the gross absorption was recorded at 1.2 million sq ft (0.1 million sq m) down from 1.7 mn sq ft in Q1 2017. Except for a few large transactions, the average deal size remained low at 15,400 sq ft (1,430 sq m). Despite a 29% decline in transaction volume from Q1 2017, we expect absorption to improve in Q3, with a few large size transactions in the pipeline totaling to 0.75 mn sq ft (70,000 sq m). We expect future demand to be reinforced by data centres, coworking operators, logistics and warehousing companies, looking at the increased enquiries from these sectors.

Chennai

The gross absorption in Q2 2017 for Chennai recorded about 1.1 million sq ft (92,903 sq m) of gross absorption (same as in Q1 2017). The market witnessed a shift in occupier focus towards the OMR-Post toll belt, which increased its share in gross leasing to 33% in Q2 2017. With sturdy expansion and relocations, OMR-Pre-toll accounted for 26% of the market, while the intracity locations in Central Business District (CBD) and off-CBD micromarkets accounted for 12% and 16% respectively. Moreover, with sizeable transactions in Ambattur, the micromarket represented 7% of gross absorption and the remaining 6% was recorded in Mount Poonamalle High (MPH) Road.

Pune

The unavailability of quality supply further affected the overall leasing volume in Q2 2017. The gross leasing was recorded at only 0.4 million sq ft (37,861 sq m) in Q2, which represents a 48% decrease from Q1 (0.78 million sq ft in Q1 2017). With no supply pipeline visible in 2017, we expect the absorption rate to remain low in coming quarters. Although, Pune is one of the major IT-ITeS markets in India, banking, financial services and insurance (BFSI) accounted for a 30% share of total absorption, followed by IT-ITeS (26%), other industries (23%), engineering and manufacturing (13%) and healthcare (7%).

Kolkata 

Sustained leasing momentum was observed in Q2 2017 with 0.2 million sq ft (18,500 sq m) of gross absorption, similar to absorption in Q1. The occupier demand was driven by relocations and expansions. The bulk of leasing volume equating to 79% was concentrated in Sector V while peripheral areas like New Town and Rajarhat accounted for an 18% share. The remaining 3% of the transaction volume was observed at CBD locations. H1 2017 had witnessed more enquiries since the last two years; hence we expect leasing activity to intensify in upcoming quarters.

 

26% drop in office space absorption in Q1 2016

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Bottom Line: Following a strong fourth quarter of 2015, the first quarter of 2016 was sluggish as most corporate space occupiers were still strategizing their real estate plans for the year. 

Office Space, Commercial Real Estate, Office occupancy, Indian property market, India real estate market, Indian realty news, Track2Media Research, Track2RealtyApproximately 5 million sq. ft. of prime office space was absorbed during Q1, 2016 (Jan – March) – a drop of approximately 26% year-on-year – according to CBRE’s India Office Market View – Q1, 2016 report.

According to the report, corporate real estate space take-up during the quarter was led by Delhi National Capital Region (NCR) with a share of 31% of total transacted space in the leading cities, followed by Mumbai (23%) and Bangalore (17%).

Corporate occupier interest remained concentrated towards prominent micro-markets such as Gurgaon in Delhi NCR; Thane, Navi Mumbai, Vikhroli, Goregaon and Andheri in Mumbai; Koramangla, Whitefield and Electronic City in Bangalore; IT Corridor in Hyderabad; and Viman Nagar in Pune.

Occupiers were also seen pre-committing space in under-construction developments, primarily in Mumbai and Gurgaon, largely led by the lack of available space in investment-grade developments at prime locations.

Commenting on the findings of the report, Anshuman Magazine, CMD, CBRE South Asia said, “While the first quarter of the year traditionally witnesses muted transaction activity, the overall sentiment among India’s corporate space occupiers is optimistic. Besides, India continues to remain one of the global key outsourcing destinations which will improve the momentum going forward.”

Almost 47% of the leasing activity in the quarter was concentrated in IT developments. Leading SEZ properties in Chennai, Bangalore, Gurgaon and Noida also witnessed considerable traction, accounting for about 14% of total transaction activity. Most SEZ transactions were the culmination of pre-commitments made by corporate occupiers in previous quarters for their office requirements.

In terms of supply, approximately 7 million sq. ft. of new office space was completed in the quarter with smaller cities such as Kolkata, Hyderabad and Pune accounting for about 68% of the total supply released during the quarter. Pune led project completions, generating about 25% of the total supply released during the quarter across leading cities. Commercial (non-IT) projects accounted for about half of the overall supply that came on-stream in Q1 2016.

“Industry sectors such as IT/ITeS and banking / financial services are likely to remain the dominant demand drivers for office space in the country, with manufacturing / engineering, e-Commerce, and pharmaceuticals being the other active sectors that are likely to generate demand for corporate real estate space. Occupiers are also likely to keep a strong check on space utilization ratios and innovate on their workplace strategies. Demand for SEZ space and pre-commitments in projects nearing completion are expected to continue to improve in the coming months,” said Ram Chandnani, Managing Director – Transactions Services, CBRE South Asia.

Increased occupier demand in quality IT and IT SEZ projects in Malad/Goregaon in Mumbai; DLF Cybercity in Gurgaon; Noida Expressway in Noida; Guindy, Velacherry, Perungudi, Mount Ponnamalle Road and Taramani in Chennai; Aundh Baner, Viman Nagar, Hinjewadi and Kharadi in Pune; and IT and Extended IT Corridors in Hyderabad, resulted in a q-o-q rental appreciation of 2–10% across these micro-markets.

Office space absorption rises to 30 million sq ft till September: Colliers

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Office Space, Commercial Real Estate, Office occupancy, Indian property market, India real estate market, Indian realty news, Track2Media Research, Track2RealtyOffice space take-up by corporates in the first nine months of the 2015 calendar year rose to 30 million sq ft, 11% more than 27 million sq ft in the same period last year, according to a new report by property consultancy Colliers International.

The consultancy anticipates the momentum to continue in the coming quarters.

“With a number of deals at advance stages, we anticipate momentum in office market to continue. Cities like Bengaluru, Gurgaon and Mumbai is set to witness maximum office uptake in the coming quarter,” said Surabhi Arora, associate director – research at Colliers India.

Corporates leased around 10.6 million sq ft of office space in the September quarter this year, a marginal rise from 10.5 million sq ft in the previous quarter.

Gurgaon marched ahead of Bengaluru and Mumbai in terms of office absorption, accounting for 23% of the total space absorbed across India in the September quarter, followed by Chennai at 20%, Bengaluru at 18%, Mumbai at 15%, Noida at 11%, Pune at 9%, Delhi at 4% and Kolkata grabbing 2% share.

Gurgaon witnessed an 18% QoQ rise in office absorption to 2.1 million sq ft in the September 2015 quarter, totalling to about 4.9 million sq ft till September this year, backed by demand from the IT/ITeS sector, which grabbed 60% share. The banking and financial services industry followed with 20%.

NH 8 (National Highway 8) remained the most preferred micro market in Gurgaon, sharing about 29% of total office absorption, followed by Golf Course Road 25% and Udyog Vihar 21%.

“Due to location advantages and affordable rents, micro markets like Udyog Vihar, institutional sectors and NH8 will continue to garner the occupiers’ interest,” Arora said.

Mumbai recorded a total of 5.95 million sq ft of office space absorbed till September this year, with about 1.4 million sq ft leased in the September quarter. Bandra Kurla Complex (BKC) remained the most preferred location with 32% of total office absorption, followed by Western Suburbs (Dadar, Goregaon, Andheri and Jogeshwari) at 28% and Central Mumbai (Worli, Dadar, Lower Parel) at 17%.

Bengaluru recorded 1.6 million sq ft of office absorption in the September quarter, taking the total to over 8 million sq ft in the first nine months this year. IT/ITeS companies leased 56% of the office space in the September quarter, followed by manufacturing at 16% and BFSI at 10%.

While cities like Chennai, Delhi and Noida recorded a rise in office absorption in the September quarter to 1.82 million sq ft, 0.33 million sq ft and 0.98 million sq ft, respectively, Pune and Kolkata witnessed a drop of 55% and 30% to 0.83 million sq ft and 0.2 million sq ft, respectively.

 

Ascendas set to raise $350 mn

Posted on by Track2Realty

Ascendas India Development Trust, commercial real estate, india real estate news, realty news india, property news india, indian realty news, track2realty, track2media, ravi sinhaAscendas India Development Trust (AIDT), the India-focused real estate fund floated by Singapore-based office space developer, is looking to raise close to $350 million. This will be the second fund that AIDT will be raising after investing its first fund of around $400 million.

According to senior officials at Ascendas India, the trust will be shortly initialising steps to raise the funds from global investors. The new fund will be used to part-fund its expansive projects coming up at Gurgaon, Chennai, Coimbatore and Pune spread over 200 acres across the cities.

Ascendas had launched AIDT during June 2007, a private real estate fund focusing on integrated property developments in India. An official spokesperson for Ascendas India however said they are yet to finalise the size of the second fund.

Ascendas has presence in more than 30 cities in 10 countries, across key markets such as Singapore, India, China, South Korea, Vietnam, Malaysia and the Philippines and has $8 billion assets under management and 45 million square feet under management.

In addition to AIDT, which funnels investments into greenfield projects, the company manages another fund — Ascendas India Trust (AIT), which holds its completed projects in India. AIT, listed on the Singapore Stock Exchange, owns around 7.9 million square feet of completed business space spread across Bangalore, Chennai and Hyderabad, with an asset size of around Rs.6,000 crore.

According to AIDT officials, it is developing an IT SEZ project at Gurgaon spread over nearly 65 acres, a 25-acre IT SEZ at Pune, a 53-acre integrated development at Coimbatore and integrated townships in Chennai and Gurgaon.

As part of its strategy to expand its footprint in India, AIDT, during February 2011, acquired a portfolio of five IT parks in Hyderabad from Phoenix Infocity with a total value of a little over Rs.850 crore. While AIT is acquiring the two completed buildings, with a total super built-up area of 0.4 million sq ft for Rs.173 crore, the remaining three buildings, with a total super built up area of 1.8 million sq ft, will be acquired as and when the buildings are completed and leased.

The pricing of the three buildings will be based on the net property income achieved at the time of acquisition which is currently estimated at Rs.680 crore.

Despite the growth, Ascendas India Chief Executive Officer Thomas Teo felt there were some hurdles on the way to its expansion plans in India.

“The STPI scheme is coming to an end and there was still no clarity on tax structures for SEZs. We are constantly in dialogue with the Government of India on these issues and let us see how it pans out,” Teo told Business Standard.

Teo, who recently took over the Indian operations of Ascendas, felt that although there was severe competition by local players, the company will not get into rate cuts to attract clients. “Lease and rents are a matter of subject which we look into closely on a frequent basis. However, with our integrated projects, we are able to attract a premium from our customers, which reflects in the 95 per cent occupancy rates across our projects.”