Office space demand in India

Commercial space absorption increased by 42% from January to July this year. During the entire 2005, the relevant office figure was 3.5 million sq ft. The office space market has primarily been driven by the IT/ITES sector, which accounts for about 75% of the total office space in India absorption in NCR.

The study conducted by the leading global property advisor DTZ Debenham Tie Leung further reveals that Gurgaon accounted for about 63% of the total absorption of office space in India the first six months with a total of 3.2 million sq ft. Over 4.4 million sq ft of office space has been leased over the past 12 months. Due to the increased demand and shortage of supply in the short term, rentals have increased by 44% in the past year in this region. Notable transactions in Gurgaon this year included IBM leasing 500,000 sq ft, SAP 100,000 sq ft, Satyam 85,000 sq ft and PWC 75,000 sq ft. IBM currently has a total commitment of about 8,00,000 sq. ft. of leased office space in Gurgaon. At the same time, CBD (central business district) and SBD (secondary business district) are attracting corporate due to improved connectivity and attractive location. The CBD (Connaught Place) with limited supply of Grade A space has witnessed absorption of only 81,800 sq ft this year. Banks, financial institutions and consultancy firms with a high consumer orientation dominate the office space demand. Due to limited supply and increasing demand office space rental values have increased by as much as 51% in the past one year and are touching Rs 250 per sq ft (in some select buildings). Key leasing transactions in the past quarter included Thales taking up 12,000 sq ft and Times Now taking up 8,000 sq ft.