Office space demand down 20 per cent in July-September quarter

NEW DELHI: The global economic environment is weighing down the commercial property market in India. The demand for office space across the top six cities in India was down 20% in the July-September quarter at 8.5 million sq ft compared to 10.5 million sq ft in the previous quarter, says a Nomura report on the property market in India. In the October-December quarter, another drop of 5-10% is expected, says Cushman & Wakefield.

“Pre-commitments during the quarter hit the lowest level since the first quarter of 2008, which to us suggests corporates are uncertain about their future plans,” says the report. “A lot of corporates are pushing back space requirement. They are reducing in some cases or are postponing space leasing to next year,” says Kaustuv Roy, executive director at Cushman & Wakefield.

Property firms were expecting the year to see absorption of 38-42 million sq ft of commercial space but Roy says with this slowdown now, it should be between 32-35 million sq ft this year. While new space leasing has dried up in many markets, a number of corporates have been looking for relocation and consolidation.

“They are looking at reducing their occupancy costs by consolidating all their offices in one low cost location,” says Roy. “Bangalore, Hyderabad and Chennai appear better placed than markets such as Mumbai, Pune and NCR, which are impacted by an oversupply situation,” says report.