Office absorption jumps 18% QoQ, Bangalore tops the charts

India office market remained strong in the second quarter of 2016, with 10.4 million sq ft of office absorption adding to about 19.2 million sq ft Year-to-date (YTD).

The percentage for this increase in office absorption was 18% increase QoQ, in which Bangalore turned out on the top place, contributing a 30% share. The start-up capital of the country was followed by NCR (21%), Hyderabad (20%), Chennai (15%), Mumbai (8%), Pune (5%) and Kolkata (1%) in the list.

Out of the leading transactions, a major one was TCS expansion, because of which it leased over 4,00,000 sq ft in Noida and 3,75,000 sq ft in Bengaluru. Similarly, IBM and Value Labs expanded their footprint in Hyderabad, and took about 3,00,000 sq ft and 2,20,000 sq ft of space on lease, respectively, in the Western suburbs, thus contributing to the rise in office absorption.

Talking of Noida, leading mobile manufacturers like Vivo Mobile and Oppo Mobile contributed in its newfound position as an Electronic manufacturing hub. While Vivo took up 2,50,000 sq ft of space there, Oppo took up 1,60,000 sq ft.

"At the macro economy level, couple of concerns were raised in Q2 2016, such as uncertainty in direction of monetary policy on account of recent change in leadership at RBI and international happenings such as BREXIT. Although, both these changes were unexpected, the impact on the business outlook in India is likely to be miniscule. However, in last couple of months, increased input costs contributed to the softer growth rate recorded in manufacturing production and services activity. Owing to this, we ought to alter our strong outlook for office market a little and expect marginal improvement in leasing activities for rest of the year. New supply is likely to remain restricted in most of the cities which will put an upward pressure on asking rents in preferred micro markets", Surabhi Arora, Senior Associate Director of Research at Colliers India, told ET.

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