In a first, Hyderabad dominated the country’s office leasing space during January-March this year, registering a whopping 287% growth compared with the same quarter last year, pipping the leader, Bengaluru, which registered a 55% decline in renting commercial space by businesses, a report by real estate consultancy CBRE India said.
Hyderabad overtook Bengaluru for the first time to be the dominant office market driving quarterly space take-up, on the back of culmination of several pre-commitments, CBRE said.
In total, gross leasing during the first quarter of 2019 touched 12.8 million sq ft, recording a growth of 3% on a quarterly basis, with Hyderabad, Bengaluru, Mumbai and the Delhi-NCR alone accounting for more than 75% of the activity. This was aided by American companies evincing more interest in setting up operations in India.
Commenting on the findings of the report, CBRE CEO for south-east Asia, Middle East and Africa, Anshuman Magazine said the office leasing activity is expected to remain stable in the short term, backed by corporates looking to expand or consolidate their operations.
While interest from American corporates is expected to sustain, we anticipate that India s position as a preferred outsourcing destination would continue to attract corporates from other geographies such as EMEA and APAC. Moreover, policy initiatives such as Make in India, Digital India, etc, along with emphasis on smart cities and industrial corridors, will likely boost operations of both Indian and multinational corporates, he said.
Technology companies continued to drive office space absorption in India, with their share in total leasing rising from 22% in Q12018 to 33% in Q12019. Besides, the share of key flexible space operators rose from 5% to 16% during the same period. However, office space take-up by sectors like engineering & manufacturing, e-commerce and BFSI declined.
Bolstered by several policy initiatives to ease out liquidity pressures and promote construction activity and listing of India s first Real Estate Investment Trust, real estate services (along with financial and professional services) grew at 7.3% during the review period, says Ram Chandnani, who is the managing director (advisory and transaction services India) for CBRE South Asia.
Driven by tech, BFSI and e-commerce firms, quarterly pre-leasing activity rose marginally on an annual basis, largely led by Pune, Bangalore, Chennai and Hyderabad.
Supply addition in Q12019 rose by 23% on a quarterly basis to touch 13.4 million sq ft. Of this, Hyderabad, Bangalore, Delhi-NCR and Mumbai accounted for about 80%, CBRE said.
Ahmedabad, Chennai, Hyderabad and Bengaluru reported a rise in development completions on a quarterly basis. SEZs continued to account for a third of the quarter s supply, rising by almost 40% as compared to Q12018.
Almost the entire SEZ supply in Hyderabad, in particular, was pre-committed as developers refrained from investing in speculative development in this segment.