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Fall in Bangalore office space demand by 61 percent
By siliconindia
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Tuesday, 12 August 2008, 00:44 IST
Bangalore: Global economic slowdown is now causing loosing demand for office space in Bangalore. The major portion of the office space in Bangalore is occupied by the IT companies. With the companies have been forcing to review their plans to beat the slowdown, the land absorption by the companies is also coming down. This affects the real estate market of the city.
According to a report by Cushman & Wakefield, a property management consultant firm, the demand for office space in Bangalore witnessed 61 percent drop on a quarter-on-quarter (QoQ).
During the April-June period of 2008, the supply of office space was 3.11 million sq ft while the total absorption was 1.97 million sq ft.
In the period between January and March 2008, the office space supply was 5.65 million sq ft with total absorption being 5.15 million sq ft. the absorption of office place is also including pre-commitments.
While taking country wide, there is a decline by 33 percent on Q-o-Q in the demand for office space across major metro cities. Kaustuv Roy, Director, Tenant Strategies & Solutions, India, Cushman & Wakefield, said "Most corporations, both Indian and multi-nationals have been adopting a wait and watch policy throughout most of the second quarter, leading to a slower uptake of real estate." "However, the economic fundamentals of India are strong and we should expect demand to pick up by the fourth quarter of the year," he added.
Cushman & Wakefield report also mentioned that almost 80 percent of absorption is witnessed in the peripheral locations of Whitefield and Outer Ring Road (Marathahalli - Sarjapur). Moreover, the average vacancy rate across micro-markets in Bangalore was estimated to be approximately eight percent, with Whitefield recording a vacancy rate in excess of 10 percent.
Office rentals have increased marginally in the CBD/Off-CBD areas in Bangalore and the suburban region by 3-4 percent since the first quarter of 2008 due to limited commercial developments.
