Office Space Absorption to be Down by 15 Percent this Year

New Delhi: Global realty consultant CBRE said absorption level of office space in India may come down by about 15 per cent to around 30 million square feet this year due to the current economic slowdown.
"The market is slow and it is mainly in the case of large space requirements by big global companies. This year office space absorption is expected to come down to about 30 million square feet," CBRE South Asia Chairman And Managing Director Anshuman Magazine told reporters on the sidelines of CII Realty Summit here.
India had witnessed an absorption level of 36 million square feet in 2011 and it has remained constant in the last few years, he added.
"Whether the situation will improve or not will depend on two factors. First is the global economic environment, which is beyond our control and the second is the government policies in India," Magazine said.
India has been witnessing slowdown in economic growth and GDP growth slipped to 6.5 per cent in 2011-12, the worst in nine years.
Magazine further said rentals for office spaces in cities like Mumbai, Bangalore, Chennai and NCR have fluctuated with some pockets within the cities witnessing increase, while some others registering decline.
When asked about inflow of foreign private equity fund in the Indian realty sector, Magazine said: "This could come down this year. Money from Europe is not coming in, though some money may still come from Asia. Overall we don't expect a big surge in foreign PE fund inflow."
In the last few years India has been witnessing about $ one billion PE inflow annually in the realty sector, he added.
Commenting on the residential segment, Magazine said: "Prices in Delhi, NCR and Mumbai have gone up by up to 30 per cent while in Bangalore it went up by 15 per cent in the last 12-18 months."
Inventories are going up and prices are not coming down leading to a slowdown in the market, he added.
"In the next three to four months, if the situation does not improve I think there may be some softening of prices in certain locations," Magazine said.