35% Decline in Indian Office Space Absorption

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It has been found from the CB Richard Ellis report that the office space absorption in India had declined by 35% between July and September of 2011. It indicates the effect of the global corporate sector on the Indian office property market. A continuing volatility of financial markets in India is the other considerable indication. Even the rental growth across the key micro markets in the country is going to be affected with this absorption decline.

About 8 million square feet of office space was absorbed between April and June of 2011 whereas only 5 million square feet was absorbed from July to September. National Capital Region (NCR), Bangalore and Mumbai accounted for 80% of the absorption this quarter. However, Hyderabad, Pune, Chennai and Kolkata constituted the remaining small portion of the absorbed office space.

When compared to the last quarter, the new office supply between July-September has lowered by 50% and it is found to be 5 million square feet. A large proportion of the supply in this quarter was evident from Hyderabad, Pune, NCR and Bangalore. Increased cost, reduced debt availability and slow off-take of existing stock are considered to attribute to this declined supply.

Source: Economic Times

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