Bengaluru retained the top slot for the highest office space
transactions in the country in the first half of 2016. The city clocked a total
transaction space of 6.1 million square feet during the period of January to
June 2016, almost matching the 6.1 million square feet of office space
transacted during the corresponding period in 2015. The city attracted substantial
interest among the IT and ITeS sectors, with big players like Google, Infosys,
HP, TCS occupying large spaces, which resulted in H1 2016 emerging as the
period with the highest transaction in four years, falling marginally short of
the H1 2011 level.
Satish B N, Executive Director – South India, Knight Frank
says, “The city witnessed the infusion of a whopping 6 million square feet of
new office space, the highest in five years after the lag that hit the market
recently, leading potential occupiers to turn to pre-leasing deals for large space
requirements.”
“The new office completions took the total office stock to 128.5
million sq ft in H1 2016, while the occupied office stock recorded 119.4
million sq ft, making it the office market with the largest occupied stock in
the country,” adds Satish.
Vacancy rates, which had been declining steadily over the
years owing to consistent transactions and retained new competitions, continued
to remain at 7 percent in H1 2016 despite the substantial number of new completions
this year.
Office Takeaways:
·
H1 2016
witnessed a 12% growth in the transaction volume across the top six cities of
India. Transactions increased from 17.9 mn sq ft in H1 2015 to 20 mn sq ft in
the latest six-monthly period
·
Rental values
have continued to maintain their upward movement in most of the cities, as the
average rents shot up by 8% Y-o-Y in H1 2016. This jump was led by cities such
as NCR, Pune and Bengaluru, where rents have moved up in the range of 10-14%
Y-o-Y in H1 2016
·
In terms of new
completions, H1 2016 has been an encouraging period, as more than 19 mn sq ft
of space was delivered, compared to just 15.8 mn sq ft in the same period the
previous year
·
Vacancy levels
in the top six cities fell marginally, from 17% in H1 2015 to less than 15% in
H1 2016
Speaking on the
occasion, Shishir Baijal, Chairman and Managing Director, Knight Frank India said, “The real
estate sector in India could be at its inflection point with sales in the top
six residential markets showing a positive trend registering 7% growth in the
first half of 2016. Factors like lower interest rates and a good monsoon will
further boost the stakeholder sentiment. We had predicted a revival in market
momentum in our FICCI – Knight Frank Sentiment Index of Q1 and the sentiments
have gone up after six consecutive quarters. The reasons for these can be
attributed to the time correction of prices in most markets, RERA becoming a
reality, recent amendments to REITs and an overall positive regulatory
environment to name a few.
The H1 2016
research shows that the unsold inventory levels have dropped by 7% Y-o-Y thus
bringing in some cheer to developers. Although Mumbai, Bangalore and Ahmedabad
have shown positive growth; NCR with its dismal performance still remains a
concern.”
He further added, “On the office front, H1 2016 witnessed a 12% growth in the
transaction volume across the top six cities of India. The H1 has been an
encouraging period, as more than 19mn sq. ft. of space was delivered, compared
to just 15.8 mn sq. ft. in the same period in the previous year. Vacancy levels
in top six cities fell marginally and rental values have continued to maintain
their upward movement in most of the cities.
