Despite the highs and lows that touched the Indian realty sector, the commercial segment seems to be on the right track. As per a recent report by CBRE, gross leasing activity recorded a growth of 5.3 percent year-on-year.
CBRE’s report titled India Office Market View Q4 2018 also pointed out that it Bengaluru that led this growth in the gross leasing activity. In fact, the city along with Hyderabad and Mumbai dominated office leasing for almost 80 percent of the overall space take-up. Overall, the gross leasing activity touched 47.4 million sq ft.
Talking industry wise, tech companies continue to be the top driver of office space take-up with a lion’s share of 40 percent during Q4 2018. Tech companies were followed by engineering and manufacturing (17%) and BFSI (13%) companies. While flexible space operators accounted for about 6% of quarterly leasing, other sectors such as research and consulting (5%) also contributed to leasing activity.
Continuing the wave of previous quarters, office space take-up was dominated by small and medium-sized transactions. While mid-sized transactions accounted for about 41 percent of the activity, while small-sized transactions had a 44 percent share.
NCR Leasing Activity Q4 2018
As per India Office Market View Q4 2018, Gurugram led the leasing activity in NCR. Inside Gurgugram, Extended Golf Course Road, DLF Cybercity and Golf Course Road accounting for nearly half of the whole NCR’s leasing activity.
Future Predictions
CBRE expects rental growth to taper in the coming quarters. While Hyderabad and Bengaluru are expected to witness an increase in rental values, cities like Pune, Chennai and NCR are expected to witness a demand-led rental growth only in select locations. Overall, rentals are more or less likely to remain firm with an upward bias in some active locations only.
However, the filing of India’s first REIT, primarily comprising office assets, is likely to be game-changer and expected to further improve investor interest in this segment in the coming quarters.
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