NEWS

Large Offices In Demand In 2018 With Growth In Business Confidence

December 12, 2018

During first 9 months of 2018, large office leasing rose 35% and accounted for 50% of total leasing.

Mumbai
Commercial property market continued to be buoyant in 2018, led by robust business confidence and bright prospects in the fastestgrowing economy in the world. The optimism in Indian economy has gained further momentum with the year closing on a cheerful note. The cherry on the top has been India’s jump of 23 spots in the World Bank’s Ease of Doing Business index to Rank 77th.

This improvement in business environment has percolated to several sectors with India’s commercial office sector being a prime benefactor. The year saw occupiers opting for large office spaces underlining the increased assurance of occupiers in the office market. Large deals with above 100,000 sq ft space are estimated to have accounted for around half of gross leasing activity of 47 million sq ft in 2018, as per data from Cushman & Wakefield.

“The increased investment in the commercial real estate is confirmation of the robust office demand story in India. With the year 2018 expected to close on a record high in terms of overall leasing volumes and leasing demand spreading across a wider spectrum of occupiers, the year ahead continues to exhibit signs of a positive trend which is expected to retain the growth momentum,” said Rohan Sharma, head of research, Cushman & Wakefield.

During the first nine months of 2018, large office leasing rose 35% to 18.2 million and accounted for 50% of total leasing. And the year is also expected to close with space leased through large deals growing 35% from last year.

As a result of the large deals, the average deal size has risen 27% this year to approximately 34,200 sq ft. Total gross leasing for 2018 is likely to move closer to 50 million — 38 million sq ft by October end — highest ever as companies’ appetite for office space remains robust. Interestingly, occupiers are pre-leasing spaces — around 9 million sq ft till September 2018 — across top cities, especially in Bengaluru and Hyderabad due to tight vacancies in the preferred office corridors.

“Gurgaon, Chennai and Hyderabad where we have large presence, growth has been robust in pre commitments and enquiries. High quality work places with LEED Platinum rating, high standards of safety and wellness are attracting potential occupiers to upcoming projects. Our new development, Cyberpark in Gurgaon is already 80% preleased,” said Sriram Khattar, MD DLF Rental Business.

Investments into India’s commercial real estate have been the highest in 10 years at around $2.6 billion during the first three quarters. With a key closure in December and some in the pipeline by Blackstone, GIC, CPPIB which possibly might take place in the current quarter, investments could touch $3.5 billion in the commercial segment, breaking previous records.

This is a leading indicator of the health of the leasing market, which is giving large global investors the confidence to take long positions in the Indian commercial market. Encouraged by India’s first REIT filing by Blackstone and Embassy in September, foreign investors are scouting for greenfield and brownfield projects.

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Source:epaper.timesgroup.com