The country's IT capital is expected to see the highest office space absorption among the key cities of India next year, says the latest office report by global real estate consultancy firm Cushman & Wakefield.
The total estimated Grade A office space absorption in India is expected to be approximately 36.8 msf (million square feet) in 2015, while the supply will be approximately 46.4 msf in the same period, it said.
The demand for office space in India would be driven by general growth in corporate activities both from global as well as domestic companies, which are expected to ramp up their operations in view of economic and political stability, C&W said in a release.
It said Bengaluru is expected to have the highest absorption of approximately 11.1 msf, followed by NCR at approximately 6.8 msf of office space absorption.
Sharing details from the report, the release said this will be at significantly improved levels compared to 2013 and 2014 highlighting the impact of improvement in business sentiment, political stability and macro-economic scenario on office market absorptions.
The trend is expected to gather pace in the second half of the New Year continuing its momentum into 2016, it added.
"Further improvement in occupier sentiment is anticipated next year as occupiers pursue growth strategies. Relocations and consolidations will also continue with occupiers increasingly adopting innovative workplace strategies to attain efficiency in operations and costs," said Sanjay Dutt, Executive Managing Director, South Asia, Cushman&Wakefield.
"Rents in suburban and peripheral locations will be largely range-bound next year due to steady infusion of supply but are expected to start firming thereafter as the supply pipeline shrinks," he added.
C&W said key office markets in India will remain largely occupier favourable with most markets remaining marginally to significantly over-supplied for the most of 2015.
Hyderabad will be the only exception where demand will be higher than supply but the general sentiment would still be tilted towards occupiers for most part of 2015, it added.
Stating that the top eight cities are expected to have a robust supply pipeline of nearly 46.4 million square feet for 2015, the release said this supply is likely to favour tenants, presenting them a variety of quality options to choose from and negotiating power in the short term.
Still, it said, the overall vacancy for top eight cities, which is estimated to rise to 19 per cent next year, will likely be contained as demand will be fuelled by companies in IT-ITeS, banking, financial services and insurance sectors (BFSI), pharmaceutical and manufacturing sectors due to an anticipated improvement in India's economic scenario.
Bengaluru will lead with an estimated 11.1 million sq ft of net absorption against a supply pipeline of 14.8 million, the release added.
Bengaluru, NCR, Mumbai, Hyderabad, Pune, Chennai, Ahmedabad, Kolkata are the top eight cities figuring in the list.