Office space absorption fell for the first time after six quarters of expansion

Office space absorption fell to 14.5 million sq ft in India's top eight markets in the first half of 2016, contracting 18% as compared to that a year ago, says a report by Cushman & Wakefield, adding that this is the first decline after six consecutive quarters of expansion.

The report has attributed this decline to shortage of office space in Bengaluru, Pune, Chennai and Delhi-NCR, leading to a mixed trend in the net absorption in the first six months of 2016.

Hyderabad, Delhi-NCR and Ahmedabad saw 10-55% y-on-y growth, while on other hand, Kolkata, Bengaluru, Chennai, Mumbai and Pune suffered 34-51% decline during this period.

The percentage fall in office space absorption can also be cited to higher levels of activity that Mumbai, Bengaluru, Chennai and Pune witnessed a year ago. However, experts are of the opinion that this trend is likely to change in the second half of 2016 because the economic conditions look hopeful.

"The first half of the year has been a mixed bag for the key markets, with large volume locations like Bangalore and Mumbai seeing a drop in net absorption owing to slower take up of space by IT/ ITeS and BFSI (banking, financial services and insurance) sectors. This, however, is going to be only temporary as the second half looks promising," Anshul Jain, MD-India at Cushman & Wakefield, told ET.

He added that a large number of companies have committed space after foreseeing that there is a limited availability of quality stock in selected markets, pushing up absorption in the coming six months.

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