Office space demand from IT firms to decline in Gurgaon, Noida

NEW DELHI: The demand for office space from IT and ITeS companies is likely to fall in Gurgaon and Noida during the second half of 2008 on account of economic slowdown in the US, a global realty consultant said in its report.

In its latest report for second quarter 2008, Jones Lang LaSalle Meghraj said that though Indian office markets have continued to post growth over the past few years, the last few quarters have seen a polarisation in the office markets in terms of growth in demand across the country.

It has categorised the office markets across six major cities - Mumbai, Delhi NCR, Bangalore, Chennai, Hyderabad and Kolkata - in three broad segments.

First segment includes markets which are likely to be "susceptible" in terms of retarded demand growth for the remaining half year of 2008, the report said.

The consultant has put Gurgaon and Noida (Delhi NCR suburbs), whitefield and electronic city (Bangalore suburbs), OMR (Chennai suburbs), Thane and New Mumbai ( Mumbai suburbs) and Rajarhat (Kolkata suburbs) in the "susceptible" category.

"In case of the susceptible markets, demand from occupiers in the IT/ITES segment, could be rationalised on the back of economic slowdown in the US.

"This coupled with the strong supply pipeline in many of these markets could lead to a potential consolidation in the respective markets, leading to relatively higher vacancies," Jones Lang LaSalle said, adding that this might not lead to any immediate rental consolidation.

The Consultant, however, cautioned that "if the global economic slowdown sustains, we foresee the vacancies to rise in these micro-markets due to strong supply volumes. This might put pressure on the rental values next year".