Make in India helps manufacturing outpace IT sector in office leasing

New Delhi: The Make in India initiative has helped the manufacturing sector snap up office space as IT/ITeS sector has started losing its dominance in the space, property consultant Knight Frank India said.

According to a Knight Frank report released on Monday, apart from Make In India, other trends which have the potential to redefine the real estate landscape are higher demand for affordable homes, stagnation in the premium segment and the preference for ready to move homes.

“Make in India made its impact felt and drove the leasing activity in the manufacturing sector in H1 2016,” said the Knight Frank India report for office transactions in NCR region.

Prime Minister Narendra Modi launched the Make in India initiative in September 2014 to encourage foreign manufacturers to set up shop in India by easing business rules and streamlining approval process.

The manufacturing sector registered a two-fold jump in office transacted space in the first half of 2016 from the year-ago period.

Office space leased by companies such as Samsung and Honeywell in Gurgaon, and Oppo in Noida contributed significantly to the sector’s demand in this half, according to the report.

In the commercial capital Mumbai, manufacturing sector transactions recorded a 95% jump with companies from chemical and pharmaceutical sectors taking up office spaces in Andheri-Kurla, Bandra Kurla Complex, Vikhroli and Powai. Chennai has also seen the manufacturing and other services sector gaining market share, especially in the last 18 months, with companies like Renault-Nissan and Ford taking up large office spaces in the city.

At the same time, there have been signs of preference for the affordable segment in the Rs.50 lakh (Rs.5 million) category.

“72% of the new launches in NCR in H1 2016 are in the sub-Rs.5 million category, indicating a move towards affordable options for home buyers,” the report said.

Nearly all the new launches in Greater Noida in H1 2016 were in the sub-Rs.50 lakh category and Greater Noida accounted for the second biggest share of units launched in NCR, after Gurgaon.

In Pune also, more developers are tapping the budget segment with no new launches in the premium segment.

The majority of launches in North Ahmadabad, a region which recorded the maximum number of new launches in Gujarat’s biggest city, were below the price range of Rs.50 lakh.

In Mumbai, some developers shrank home sizes by up to 19% to make them more affordable.

Another phenomenon which became more visible in the report was the preference for ready-to-move-in projects.

“This growing inclination is a consequence of project delays and long gestation periods in the completion of infrastructure projects,” said the report.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.