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Rise in corporate sector activities led to 33 million sq ft of space during 2014

The Times of India:  January, 2015

Mumbai: Enhanced levels of activity in corporate real estate transactions led to a total office space take-up of more than 33 million sq ft during 2014, said a CBRE report released on Monday.

This activity was led for the most part by Bangalore (37%) and the National Capital Region (NCR) (24%). Total corporate space take-up in the fourth quarter of 2014 was more than 9 million sq ft — the highest quarterly levels over the past three years. "Such transaction levels echoed the overall sense of optimism that prevailed in the Indian commercial real estate market in 2014," it said.

The demand for commercial office space remained sustained throughout the year; and year-on-year space take-up increased by around 10% over 2013. The year also saw significant investor interest in completed and well-leased core commercial assets and IT parks.

"Except for Mumbai and Hyderabad, all leading cities witnessed an increased demand for office space during 2014 from corporate occupiers," said the report. "While a rationalized supply and increased focus on committing space in under-construction projects in Mumbai led to a drop in transaction activity; a subdued political climate in Hyderabad during the first half of 2014 contributed to a similar drop."

Owing to available quality office developments with larger floor plates, occupier preferences remained focused on the dominant office districts of Gurgaon, Thane/Navi Mumbai, Whitefield (Bangalore), Magarpatta (Pune) and the IT Corridor in Hyderabad, among others.

Among the leading sectors dominating office space requirements during the year, the IT/ITeS sector continued to account for a major portion, followed by banking/financial services. Other prominent sectors included manufacturing and engineering, telecommunications, construction, consulting and research, healthcare and pharmaceuticals. Additionally, cities such as Delhi and Bangalore attracted a healthy demand from the e-commerce segment during the fourth quarter.

"The fundamentals are in place for the global economy to move ahead in 2015. There are signs of business conditions turning the corner and better news is anticipated ahead for India's realty sector. The factors most likely to further impact the real estate market positively are stronger GDP growth; more relevant reforms; and the paring of interest rates," said Anshuman Magazine, CMD, CBRE South Asia.