Bullish on the revival of the economy after general elections, real estate consultancy firm Cushman & Wakefield expects nearly 132 million sqft of office space, across the eight major metros, to get absorbed by 2017.
However, the report said the current year (2013) will see a 26 per cent fall in office space absorption to around 22.5 million sqft over the past year due to the ongoing slump in the economy.
The supply of office space between 2013 and 2017 in the top eight cities-Delhi-NCR, Mumbai, Bangalore, Chennai, Hyderabad, Ahmedabad, Kolkata, and Pune is expected to be around 143 million sqft.
Of this 143 million sqft, around 90 million sqft are currently under various stages construction and is expected to get completed by 2015, the report said.
“The office market is expected to remain attractive for occupiers with steady increase in absorption after a trend of decline in 2013”.
“With the economy expecting more stability in the post-election phase from 2015, the absorption trend is also expected to pick pace especially in established markets of Bangalore, Mumbai and Delhi-NCR,” Cushman & Wakefield executive managing director for South Asia Sanjay Dutt said.
The report said the absorption of office space will decline in 2013 over 2012, mainly due to the current economic slowdown, which has made many companies defer their leasing requirements.
According to the report, office space absorption in top eight cities including is expected to be over 22.5 million sqft in 2013, a decline of around 26 per cent over 2012.
However, going forward the trend in absorption is expected to pick up at a steady pace with 2015 with an estimated absorption of 28 million sqft.
Dutt said that the commercial office sector has seen substantial deferment of supply in the recent times due to slack in demand and delays in regulatory clearances.
“Similar trend is expected to continue in the next few years owing to issues such as demand from occupiers as well as funding issues that developers have been facing,” he added.
However, growth is expected to set in from the second half of 2014 when an increase in leasing activities both on account of entry of new companies into the country, expansion of existing companies and indeed relocation and consolidation activities that are expected to continue, Dutt said.