Tag Archives: Office space absorption

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. 


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.


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.


“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. 


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.


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.


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.


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).


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).


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.


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.


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.


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.


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.


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.


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.


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%).


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.


43-54 billion REIT eligible commercial property in India

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News Point: With 315 MSF office and 39 MSF mall stocks, value of REIT-eligible stock seen to be highest in Bengaluru, followed by Mumbai. Bengaluru, Mumbai and Delhi-NCR cumulatively account for over 67% of total REIT-eligible stock

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 IndiaIndian commercial real estate offers investment opportunity worth USD 43 – 54 billion (Rs. 2,88,758 crore-Rs. 3,60,948 crore) across the top 8 cities via REIT-eligible ready stocks as per and report entitled “Commercial Real Estate: Steering Growth in Indian Cities”.

The report was released at RICS Real Estate Conference 2016 – “Commercial Real Estate: Corporate Catalyst” with Cushman & Wakefield as research partners for the conference. A key focus of the conference discussions was evolving occupier demand, REITs and international standards.

The report estimates that the value of REIT-eligible stock is seen to be the highest in Bengaluru (USD 15.8 billion)/Rs. 1,05,213 crore) primarily due to the high volume of investible Grade developments. Mumbai (USD 14.5 billion/Rs. 96,461 crore) comes a close second due to higher capital values of commercial properties, despite having roughly half of Bengaluru’s REIT-able stock.

The estimated value of REIT –eligible stock in NCR is USD 11.04 billion / Rs. 73,423 crores which is the third highest. Further, it is estimated that approximately 315 million square feet (msf) of office inventory is eligible for REIT across the cities. The REIT-eligible inventory includes existing non-strata sold Grade A inventory, wherein Bengaluru, Mumbai and Delhi-NCR cumulatively account for over 67%. 

Delivering the keynote address, Barnali Mukherjee, Chief General Manager, Securities and Exchange Board of India (SEBI), said, “We have come out with the IPO guidelines for the issuance of units of INVits. On same lines, we are working on the IPO guidelines for units of REITs. Since there are no accounting standards for REITs and INVits, we have set up sub-committees looking at the financials to be brought out with the offer documents as also the continuous disclosure to be made; also set up a sub-committee for issuance of valuations, who will come out with their report. On the valuations side, a separate chapter has been included in REIT regulations where lots of rights and responsibilities have been given to the valuer who has to comply with International Valuation Standards.”

“We have already received 4 applications for infrastructure investment trusts (INVits), where two applications have been processed and two are registered. We have come out with amendments on REIT regulations to bring more clarity and make it more acceptable but as of now, we haven’t received any applications for REITs. Whatever SEBI could do has already been done, in terms of removing key roadblocks such as capital gains tax and DDT and now we are looking forward to applications for REITs so that the REIT market can take off,” she added.

Sachin Sandhir, Global Managing Director – Emerging Business, RICS said “Commercial real estate is expected to see continued demand, fueled by positive business sentiment (especially in IT/ITES and new age digital businesses) based on major policy reforms undertaken by the Government. There is also likely to be considerable international investor interest in income yielding assets and the first REITs and INVits are not far away. REITs will drive the need for Indian commercial real estate to speak the language of international investors which, in turn will create demand international standards and corporate governance; professionalism and skills – which are all the things that the RICS Stands for.”

Sanjay Dutt, Managing Director, India, Cushman & Wakefield said, “REITs can provide a huge opportunity for developers and investors in India given the potential in the . REITs would help developers resolve their fund-raising issues and allow them to focus on completing their projects in a timely manner. Apart from the top 3 cities, Chennai and Pune have immense scope for REITs with approximately 34 MSF each of REITS-eligible stock. Going forward, by the end of 2017, Hyderabad’s REIT-able stock is expected to reach approximately 41 MSF. This would place Hyderabad’s REIT-able stock at 4th place, surpassing that of Chennai and Pune. With investor and occupier interests rising in Hyderabad, a high number of Grade A projects are likely to be completed enabling high REIT-able stock.”

Apart from the office sector, the retail sector too has high potential to generate rental income for investors. Since last year, private-equity firms have shown interest in investing in malls in India, indicating that there is acertain attractiveness in the retail shopping centre space owing to future prospects.

Sachin Sandhir further added, “RICS will continue to work to promote International Property Measurement Standards (IPMS) a global collaborative initiative with 70 global professional bodies, which will bring in a common basis of measuring assets. RICS is also advocating International valuation standards (IVS) and the RICS red book as a basis for valuations of these REIT-able assets. With a common basis of measurement and a common basis of valuations and skilled professionals to undertake delivery of grade A office space coupled with ease of doing business initiatives of the Government, Indian commercial real estate will surely realize its true potential.”

Devina Ghildial, Managing Director – South Asia, RICS said – “2016 looks to be a bright spark for commercial real estate. The asset class looks to be on solid footing with all the policy reforms and initiatives from the Government. The industry will see the emergence of not only REIT’s and INVits but new asset classes including new suburban business districts which will propel commercial real estate to produce a lot more grade A office space in the times to come. In fact, in Q1 2016 alone, the market has seen absorption to the tune of approximately 5 MSF.

“Going forward, we will also see corporate occupiers and investors starting to demand international standards and focus on creating sustainable assets, which will create long term value for international investors in the form of higher yields. This would be a key expectation from the development community. Now more than ever, the potential of commercial real estate is apparent, and this makes it an opportune time for REITs to find their way into the market,” she added.

Of the REIT-eligible stock across the 8 cities, Bengaluru has over 100 MSF of REIT-eligible stock (33% of total REIT-able stock), more than double of that of Mumbai. Approximately 75% of the total (all grades) office stock in Bengaluru is eligible for REIT investments. Delhi-NCR (56 MSF) and Mumbai (51 MSF) are expected to follow Bengaluru in terms of REIT-able stock as of Q1 2016.

REITs once implemented in India would enable investors to generate a stable source of income and also earn profits by trading the units of REITs, thereby increasing the attractiveness of REITs as investing medium. With the government exempting Dividend Distribution Tax (DDT) for Special Purpose Vehicle (SPV) of REITS in the Union Budget, the investment vehicle is likely to be more attractive for investors.

Mall stock of 39 MSF eligible for REIT investment in India

The top 8 cities have REIT-eligible mall supply of approximately 39 MSF, with Bengaluru, Delhi-NCR and Mumbai together accounting for about 64% of the retail inventory. Owing to the presence of large mall developers in Delhi-NCR, Mumbai and Bengaluru that operate some of the best malls in India, investors are likely to concentrate their investments in these cities. Mumbai (11 MSF) has the highest stock of REIT-able malls i.e. non-strata sold grade A malls followed by Delhi NCR (7.4 MSF) and Bengaluru (6.5 MSF).

The changing phase of workplace utilization in India

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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 IndiaThe IT/ITeS sector has clearly been driving corporate real estate in the country; and consequently, much of the development in this space is being propelled by IT and back-office demand for workspaces, as per CBRE’s India report – Real Estate & Workplace Strategies of Shared Services Occupiers.

The report focuses on the remarkable growth of the outsourcing and technology industry over the last two decades; and how the sector has been implementing strategies for managing their real estate portfolios.

India’s status as a global outsourcing hub is also reflected by the fact that approximately 90% of total office space occupied in 2014 and during the first nine months of 2015 was for either back-offices or a combination of back and front-office operations of companies.

As shared services occupiers respond to the forces of globalization amid a backdrop of economic uncertainty and focus on cost optimization, their real estate portfolio strategies have varied.

Anshuman Magazine, Chairman & MD, CBRE South Asia said, “For most global corporate office occupiers setting up a shared services platform in the country, space take up strategies are tied with their overall corporate strategies. As such, parameters like space utilization, efficiency and productivity play a large role in revising real estate strategies. Going forward I believe that these larger aspects will dictate how global corporates expand their offices across key cities in the country.”

“While India remains the preferred destination for outsourcing, corporate occupiers have been growing in suburban and peripheral locations in the major Tier I cities. The emphasis on quality infrastructure, mass transit and rentals continues to play a key role in decision making,” said Ram Chandnani, Managing Director, Transaction Services, CBRE South Asia Pvt. Ltd.

Organizations are now under enormous pressure to drive down costs by increasing their workplace ‘static density’—the space per sq. ft. per workstation. Benchmarking metrics such as workplace density and space utilization are becoming more critical in helping corporate occupiers make informed workplace and real estate decisions, and manage their real estate as a strategic asset; however, this needs to be approached in the right way.

Focus on workspace density

Workspace density can be broadly classified into ‘static’ or ‘dynamic’ types. In a static density model, employees are assigned a fixed workspace as a primary work station. The dynamic density model allows staff to work flexibly by choosing different places to work around the office.

Static density across companies is based on factors such as the location of the office (e.g., whether an office is in a core or suburban area), size of operations, the use of space as reward (e.g., senior staff are often allocated larger spaces), whether it is a private or public sector company, and the nature of work (e.g., employees in the financial sector often have specialized spaces and work desks).

Space and Technology: Workspaces are getting smaller, and documentation is increasingly moving online, limiting storage needs. While the increased focus on effective space utilization has given birth to the concept of workplace strategy, technology is playing a pivotal role in successful implementation.

Space Utilization: Workplace strategy involves creating a healthy relationship between technology, space and people. However, space utilization has the most significant impact on commercial real estate dynamics. Firms have to accommodate growing headcounts amid a steady increase in real estate costs, which is a challenge in the cost-sensitive and high-headcount outsourcing industry.

Emerging workplace trends in India

Office space design has gradually moved from a rigid floor plan to one facilitating an open plan seating arrangement. Over the past decade or so, the share of cubicle spaces in the overall floor plan of a typical office has fallen from 23–25% to just 5% today. On the other hand, open plan seating, which comprised around 25% of the floor plan in the past, has increased to 45–50% today.

The share of open floor seating arrangements often varies across different floor plate sizes. For larger office spaces, companies have the flexibility to further increase the size of the area allocated to open plan seating while doing away with corner offices and limiting the space allocated for meeting rooms and circulation

“Corporate occupiers must develop a complete understanding of how their people work, and what their organizational objectives and imperatives are. It is only by aligning these two fundamental perspectives that companies can implement a workplace strategy capable of achieving cost effective business transformation,” Magazine added.

Office space strong catalyst to housing revival in Mumbai

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Track2Realty Exclusive

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 India In the evaluation of sustainability of a housing market, the absorption of office space is the prime indicator across the world. After all, it is the economic activity and the job magnet that fuels the demand for new houses. The city of Mumbai has always been blessed on that count due to demand and supply dynamics.

As a matter of fact, in Mumbai the stock of housing supply has been so less compared to the inherent demand that the city happens to be arguably the only city in the world where the best of residential properties are selling at higher price than the best of commercial spaces.

The slowdown and the resultant slow sales, of late, nevertheless started giving an impression of over-supply in the under-supplied housing market of Mumbai. However, the financial capital of India has time and again proved the prophets of doomsday wrong with its property market proving to be more resilient than any other market.

And hence, market analysts are not surprised with the fact that the dynamics is yet again changing and the office space absorption pattern has already indicated that the revival of Mumbai housing market is on the cards.

Facts speak for themselves. As per a report by Colliers International, the commercial capital of India registered a record over 2.93 million sq feet of office space absorption in April-June quarter this year, its best performance since January-March 2013.

It has also outperformed many other traditional cities known for high business activity, of late. More importantly, there are multiple demand drivers ranging from Banking, Financial Services & Insurance (FSI), IT/ITeS, Manufacturing, Pharmaceutical, Media & Entertainment sector that are bullish on the city. These are the sectors who are at the forefront of high occupancy across the city.

Does it sound like more job creation & economic activity ahead? Doesn’t it sound like more housing demand? Analysts tracking the city property market maintain the fundamentals are heavily loaded in favour of housing demand ahead. The developers also believe it is a matter of one more quarter and the sales figure during the festive season would give an altogether different statistics as far as housing absorption is concerned.

Brotin Banerjee, MD & CEO of Tata Housing agrees that there has been a revival in the fortunes of office space in Mumbai as the city has registered absorption of 2.93 million sq feet with industries like BFSI, IT/ITeS, Manufacturing, Pharma taking over office spaces in the city.  It is currently in sharp contrast to the residential real estate market which is witnessing lower absorption rates. However if commercial sales are to go by, this impetus is directly proportionate to the demand for residential developments.

“With the festival season around the corner in Mumbai, we are expecting an upswing in the property transactions as people prefer buying houses due to the auspiciousness of time. The real estate landscape in Mumbai has reached a plateau but with slew of measures like relaxation in the FDI norms followed by the interest rate cuts and the facilitation of REITs by Government of India and endeavors to introduce clarity through the ‘Real Estate Regulatory Bill’ will help to foster the comeback of housing market in Mumbai region. With festival seasons due to start from September, we are sanguine about the revival of the housing market in Mumbai,” says Banerjee.

David Walker, Managing Director, SARE Homes also points out to the recent report by property consultants JLL that says Mumbai will continue to see an increase in leasing activity by BFSI companies. Major activity will be seen in its sub-markets like the key commercial district, Bandra Kurla complex (BKC), and the western suburbs. Commercial development would continue to define the real estate market in Mumbai, creating a ripple effect on the growth of residential market.

“There is a huge unmet demand for affordable housing in Mumbai. Mumbai is growing in terms of infrastructure and connectivity, and has become a hub for media, entertainment, consultancy and financial services.  This has resulted in job opportunities. It would be prudent to say that demand surged but so have the prices. Looking at the current scenario with an already low profit margin, decline in prices is a farfetched reality. But developers are expected to come up with attractive offers and incentives to accelerate sales during the auspicious festive season,” says Walker.

Manju Yagnik, Vice Chairperson of Nahar Group welcomes the developments and calls it a positive indication that the market is gaining better traction. According to her, we can look forward to better conversions going forward. High absorption of office space indicates healthy outlook in economy and employment, which invariably trickles down to increase in demand for residential property. The important aspect here is revival of the market which bodes well for the entire real estate sector.

“In order to see a genuine housing revival, the government will need to take the initiative by introducing more industry friendly policies which will propel growth and have a ripple effect within the real estate sector. We hope to see some positivity this festive season but most importantly we need to create a conducive environment for growth of the real estate sector,” says Yagnik.

There is no denying that housing revival is directly proportional to the office space consumption. However, it is not just the raw statistics that is giving solace to the residential developers of Mumbai. There are actually three strong indicators that are lending credence to the revival theory of Mumbai housing.

First, it is not just the volume of absorption that is on the higher side; rather the fact that large companies are opting for bigger spaces and even the entire floor plates are being negotiated suggests that revival of housing demand is not far.

Secondly, this demand of office spaces is not single-sector driven but multiple demand drivers are in play today and that suggests the expected growth is not dependent on the fortunes of any one industry. And thirdly, the spirit of festive season with attractive deals and price points across the Mumbai market adds zing to the housing demand.