Growth signs in residential office real estate

Chennai : The residential and office real estate markets are showing growth signs in Mumbai, National Capital Region (NCR), Pune, Chennai, Bangalore and Hyderabad, said a study by Knight Frank India.

"With a stable central government, sops for the housing sector and other government decisions for economic revival seem to have changed the home buyer's sentiment from negative to positive in the past three months," Gulam Zia, executive director, Knight Frank India, told reporters here releasing the report.

According to the report, the sales volume in the six cities is expected to show 26 percent growth rate in the second half of 2014 as compared to the corresponding period of 2013.The number of new project launches is expected to log a growth of five percent during the second half of 2014.

High unsold inventory and poor response received by the new projects launched during the second half of 2013 and first half of 2014 are expected to deter real estate developers from launching new projects.According to the report the exceptions for the above would be Chennai and NCR markets which are forecasted to see new project launches.

Meanwhile, the office space market continued its recovery path over the past two years with vacancy levels falling from 21 percent in second half of 2012 to less than 19 percent in the first half of 2014.According to Zia, for the full year 2014 the absorption of office space is expected to touch 36.5 million sq.ft up from 33.9 million sq.ft that was absorbed in 2013.

He said demand for office space is increasing in service sectors apart from information technology (IT) and IT Enabled Services (ITES).The other service sectors that are absorbing office space in the six cities are consulting, retail, e-commerce and others.

Zia said it is too early to comment whether online retailers would eat into the business of modern retailers thereby putting the business of malls into question.