Commercial space absorption drops 12% in Q1

BANGALORE: Demand for grade A offices across India's seven largest cities dropped by 12% quarter-on-quarter (q-o-q) in Q1 2012 due to uncertain economic scenario in the country.

"Occupier demand remained subdued due to the cautious sentiment resulting in an overall take-up of 7.4 million sq ft for the quarter, representing a decrease of 15% y-o-y," mentioned a recent report by DTZ India.

The available stock of grade A office space across major cities like Mumbai, Delhi, Bangalore stood at 376.2 million sft in Q1 compared to 370.25 million sft in the previous quarter, representing an increase of 2% q-o-q.

"Cautious tenant sentiment is likely to prevail in the short term. As a result, rents across most markets are expected to remain largely unchanged, at least in the first half of the year," says DTZ.

In total approximately 34 million sft of new supply is expected to come to the market across these cities. Mumbai followed by Bengaluru and Delhi NCR. However, the rising input costs and liquidity crunch at the developers' end due to high lending rates continue to be worrisome and might impact the delivery timelines of the projects.