The first three months of 2015 have seen potential growth in the real estate sector. This sector witnessed a lease of 8.5 million sq ft in the top 8 metro cities, as has been mentioned by the Colliers International Study. The highest officer leases were in Bengaluru, with a total lease of 3.82 million sq ft. Gurgaon and Noida also had a massive growth in lease agreements (1.48 million square feet). In contrast, Mumbai reached 1.34 million sq. ft, Kolkata at 0.22 million sq ft, and Chennai at 0.81 million square feet. The study mentioned that the usage and lease of office space increased by 2.8% in the previous quarter. BFSI and IT/ITeS are the main sectors where the demand for office leases has increased. Moreover, within the IT/ITeS sector, e-commerce companies absorbed almost 52% of the total space.
Select micro markets such as Mumbai and Bengaluru witnessed increased rental values during the same quarter. Vikas Kalia, the national director at Colliers International, mentioned that Bengaluru is profiting the most regarding demand and supply. Approximately 2 million square feet of office space will be completed within the next quarter, within which 0.2 million sq ft have already been committed.
The increasing rate of foreign investment and development activities will more likely result in higher demand for office spaces and higher rent rates.
In the case of Gurgaon, institutional sectors such as Sector 32 and Sector 34 will still be preferred due to the locational advantage and competitive rental rates. Other than this, micro markets like DLF Cyber City, Sohna Road, NH-8, Golf Course and others will also see a growth in rental value by 5 to 10%. This is because of the increasing demand for these places and their high occupancy rates. Kalia has also stated that the absorption of Special Economic Zones (SEZs) has also increased due to the closure of some large format deals in the trailing 12 months, and many are to be completed shortly.
The report has also suggested that the most robust markets like Gurgaon and Bengaluru will develop new stocks due to the increased demand for tenants. However, developers will remain cautious about speculative construction, reducing the risk of overbuilding.