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City Office Space absorption drops, but fares better than Delhi - NCR.
TIMES NEWS NETWORK
Thanks to heightened business activity towards the end of 2014 in Hyderabad, the new office space absorption remained subdued (a 37% decline) during the first quarter of 2015 but the `City of Pearls' fared better than the Delhi-NCR region, which reported a 60% decline in net office space absorption in the same period due to delays in decision making, a study by real estate consultants Cushman & Wakefield has revealed.
However, Chennai and Bengaluru were streets ahead of Hyderabad, witnessing a manifold jump in net absorption at 1,462% and 512% respectively as demand from ITITES companies remained strongest for the southern cities in the improving business environment, said the study which was released on Thursday .
“Hyderabad saw a decline in net absorption largely due to a very hectic second half in 2014, which saw many large sized transactions being concluded, leaving less scope for activities in the first quarter of 2015,“ the report said.
Hyderabad saw a 53% drop in supply of office space in the first quarter of 2015 at 1 million sft as compared to 2.1 million sft during the first quarter of 2014. Similarly , the net absorption of office space in the city too plunged 37% to 1.1 million sft in the first quarter of 2015 from 1.7 million sft in the year ago period. “Hyderabad witnessed nearly 1 million sft supply in the first quarter of 2015 with Grade A developments contributing 65% to it largely in the suburban locations of Madhapur (65%) and Gachibowli (21%). IT-SEZ developments dominated the supply with a 65% share,“ the report said, adding that though the IT-ITeS sector dominated leasing activity, a majority of the space (53%) was leased in non-IT buildings. On the future outlook, C&W indicated that office space rentals in Hyderabad were expected to appreciate in select submarkets. “Rental values in suburban Gachibowli may appreciate marginally in the next quarter as upcoming supply is likely to be introduced at higher rentals. Limited availability of quality office spaces in Madhapur may also push up demand in Gachibowli,“ it added.
According to the report, a chunk of companies are eyeing expansion, consolidation and relocation activities in the core or gateway markets due to which markets like Bangalore, Delhi-NCR and Mumbai are expected to see a steadier increase in activities as against their immediate alternate markets like Hyderabad, Pune and Chennai, it added.
source : timesofindia 17/4/2015