Office space: Hyderabad leads in net absorption

Hyderabad: Hyderabad topped the chart in net absorption of office space and new completions of overall projects among all prime markets in India. The City of Pearls recorded a 36 per cent market share in net absorption in the office space and 44 per cent in new completions of realty projects during the July-September quarter. Bengaluru and Delhi-NCR markets followed Hyderabad in net absorption and new completions, according to a latest study by JLL.

During the period, the commercial supply of office space continued under pressure in Mumbai. However, the housing sales during the first nine months of 2019 failed to reach the levels seen in the pre-demonetisation era. About 120,000 units were sold across the top seven markets during the pre-demonetisation period, the report added.

According to ‘India Real Estate Market Update Q3-2019,’ released by JLL on Tuesday, nine cities led by Hyderabad performed well in the office market space in 2019.

“In 2019 so far, the office market space in the top seven cities Mumbai, New Delhi, Gurugram, Kolkata, Bengaluru, Chennai, Hyderabad, Pune, Ahmedabad, performed well. The year 2019 witnessed the launch of the country’s first real estate investment trust (REIT). Office space leasing has been in full swing. Domestic investors and foreign companies have been chasing investment-ready commercial assets. Several foreign companies are keen on development opportunities in top cities. The demand in the office market is expected to grow at a similar momentum for the next few years,” said Mr Samantak Das, chief economist and head of research & REIS, JLL India.

The report added that demand for co-working space has been increasing in the country. The pace of leasing in co-working segment remained muted in the third quarter of 2019. However, the space taken up by operators increased to 13 per cent of the overall leasing during January to September 2019, as compared to 10 per cent during the corresponding period of last year, it said.

After witnessing a revival of housing sales in 2018, the domestic market witnessed a growth of 14 per cent in the first nine months (January-September) of 2019 as compared to the corresponding period in 2018. The office segment witnessed strong leasing, registering a jump of 40 per cent during the same period as compared to the corresponding period in the previous year, the report added.

Overall housing sales rose 14 per cent in the first nine months. But, it has yet to reach pre-demonetisation levels. Office segment witnessed a robust 40 per cent growth in net absorption during the same period at 33 mn sqft. New launches fell nine per cent in the first three quarters of 2019 as compared to the corresponding period in the previous year. Mumbai, Delhi-NCR and Bengaluru accounted for almost 60 per cent of the total housing sales. With over 50 per cent market share, Pune leads in affordable and mid-income housing.

The third quarter of 2019 saw a moderate decline in new launches of four per cent on a Year-on-Year basis. Except for Mumbai and Delhi NCR, all the other cities witnessed a dip in new launches in Q3 2019. Mumbai and Bengaluru continued to dominate new launches and formed more than 60 per cent the overall launches during the quarter.

Ramesh Nair, CEO & Country Head, JLL India, said, “The revival seen in housing sales in 2018 has been maintained during 2019 as well. Developers have been focusing on the timely delivery of already launched projects and have been trying to clear their unsold inventory. Since January 2019, several measures including a cumulative 110 bps rate cut have been announced to help the sector revive and grow. While banks are yet to fully transmit the rate cuts by a corresponding reduction in lending rates, this has strengthened consumer sentiment. We hope that developers will be able to register good sales during the festive season.”