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Slow Down In Office Demand in Q2 2008: Cushman & Wakefield
26 Aug, 2008, India
The second quarter of 2008 witnessed stable rental values across major micro markets in the major cities with some CBD and off – CBD locations witnessing rental hikes in the range of 3 – 5 percent over the last quarter. Some peripheral locations in NCR and Chennai also saw a correction in rental values largely due to excessive supply as well as deferred development plans of various proposed projects. Pune was however an exception to the stable rentals where all micro markets witnessed a rise in rental values in the range of 2% – 7% over the last quarter. This was largely due to lack of supply of Grade A commercial in CBD falling short of demand while in the peripheral locations demand driven by the IT/ITeS sector led to an increase of rental values. Malad in Mumbai recorded the highest quarter –on – quarter rental appreciation at 11% due to lack of supply of Grade A properties and with most of the new supply already pre-committed. Dalhousie (off-CBD, Kolkata), too witnessed high rental increase of 10%, due to high demand and lack of redevelopment potential or fresh supply.
|
RENTAL MOVEMENT IN Q2 2008 |
|||
|
City |
Micro Market |
Rental Values INR /M0nth/sq.ft. |
% age change from 3 Months ago |
|
NCR |
CBD – Prime |
348 |
4% |
|
|
Gurgaon (Commercial) |
118 |
4% |
|
|
Gurgaon (IT/SEZ) |
76 |
-3% |
|
|
Noida (IT/SEZ) |
39 |
-13% |
|
Mumbai |
Malad |
100 |
11% |
|
Bangalore |
Suburban (C.V. Raman Nagar, Koramangla, Indiranagar) |
55 |
4 % |
|
Chennai |
Off – CBD (T.Nagar, Alwarpet) Corporate |
78 |
4 % |
|
|
CBD Anna Salai / RK Salai |
72 |
-4% |
|
|
Off –CBD (T.Nagar / Alwarpet) IT Space |
65 |
-7% |
|
|
Peripheral (Rajiv Gandhi Salai) |
25 |
-7% |
|
Pune |
S.B.Road |
80 |
7% |
|
|
Aundh/Baner |
55 |
6% |
|
|
Hadapsar / Kharadi |
46 |
7% |
|
|
Sholapur Road |
32 |
7% |
|
Kolkata |
CBD |
110 |
5 % |
|
|
Dalhousie |
55 |
10 % |
|
Ahmedabad |
Sarkhej-Gandhinagar Highway |
38 |
9% |
|
|
Ashram Road |
32 |
7% |
Source: Cushman & Wakefield Research
According to the latest Cushman & Wakefield report, demand for 2Q 2008 was at 9.74 million sq.ft. dominated by absorption which was recorded at 6.36 million sq.ft. and only 3.38 million sq.ft as fresh pre-commitments in 2Q 2008. Supply for second quarter 2008 was recorded at 18.07 million. The IT/ITeS sector, which has been one of the largest consumers of commercial real estate, have deferred their expansion plans, leading to slowdown in the uptake in 2Q 2008. Further, there are certain micromarkets, like NOIDA in NCR, Rajiv Gandhi Salai in Chennai etc. recorded excess supply for this quarter thus increasing the overall vacancy rates.
|
City |
Total projected supply for 2008 (in sq. Ft) |
Supply – Q2-08 (in sq. Ft) |
Absorption – Q2 -08 (in mn. Sq.ft.) |
Pre commitments – Q2-08 (in mn sq.ft.) |
Demand – Q2 -08 (in mn sq.ft.) |
|
Bangalore |
14.73 |
3.11 |
1.97 |
- |
1.97 |
|
Chennai |
12.66 |
3.80 |
0.91 |
0.64 |
1.55 |
|
Hyderabad |
4.88 |
0.75 |
0.10 |
0.37 |
0.47 |
|
Kolkata |
4.17 |
0.66 |
0.08 |
0.11 |
0.19 |
|
Mumbai |
13.89 |
4.09 |
0.69 |
0.31 |
1.00 |
|
NCR |
18.28 |
4.34 |
2.13 |
1.17 |
3.30 |
|
Pune |
10.42 |
1.02 |
0.44 |
0.75 |
1.19 |
|
Ahmedabad |
0.43 |
0.30 |
0.04 |
0.03 |
0.07 |
|
TOTAL |
79.46 |
18.07 |
6.36 |
3.38 |
9.74 |
Source: Cushman & Wakefield Research
Kaustuv Roy, Director, Tenant Strategies & Solutions, India, Cushman & Wakefield says, “There has been a slowdown in the actual transactions witnessed in second quarter of 2008 owing to a number of factors, primary amongst which is a general slowdown of the economy. Most corporations, both Indian and Multi- Nationals have been adopting a wait –and –watch policy throughout most of the second quarter, leading to a slower uptake of real estate. However, the economic fundamentals of India are strong and we should expect demand pick up by the 4th quarter of the year.”
For further information, please contact:
The Press Office
Cushman & Wakefield
Tel: + 124 469 5555
Visit Cushman & Wakefield’s Knowledge Center at www.cushmanwakefield.com to access this and other reports on leading real estate issues, trends and market statistics from around the world.
Note to Editors:
1. Cushman & Wakefield is one of the world’s largest commercial real estate services firms. Founded in 1917, the firm has 221 offices in 58 countries, and 15,000 talented professionals. Cushman & Wakefield delivers integrated solutions by actively advising, implementing and managing on behalf of landlords, tenants, lenders and investors through every stage of the real estate process. These solutions include representing clients in the buying, selling, financing, leasing and managing of assets. The firm also provides valuation advice, strategic planning and research, portfolio analysis, and site selection and space location assistance, among many other advisory services. To find out more about Cushman & Wakefield, visit www.cushmanwakefield.com
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