World’s largest privately-held commercial real estate services firm Cushman & Wakefield in its latest Asia Office Forecast Report for 2014 – Top Trends to Watch’ has highlighted the healthy demand forecasted for office space across Asia in the new year. Bangalore is expected to see the second highest absorption in the APAC region and the highest demand in the country owing to expansion of the IT, ITeS and multi-national companies. Cushman & Wakefield forecasted that the office demand is likely to reach 60 million square feet (msf) in all 30 major cities tracked within Asia Pacific.
Bengaluru is expected to record the second highest net office absorption in the APAC region at an estimate of 5.6 msf in 2014 with a year-on-year increase of approximately 16 per cent from 2013. NCR, which will see the sixth highest net absorption of offices space in the region, will record net absorption of 3.6 msf representing a rise of approximately 10 per cent over 2013.
Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield said, “The demand for commercial office space will strengthen going forward in 2014 and 2015. The oversupply situation, which most cities across the country are witnessing, will ease from 2014 onwards as economic conditions improve domestically and globally.”
“IT/ ITeS has been greatly affected by the global economic scenario impacting the growth of the sector in India. With a more favourable dollar to rupee exchange rate and the improvement in global economic scenario, we expect the industry to benefit in terms of increase in exports of IT services from India,” said Dutt.
Leading markets of India recorded a drop of approximately 7 per cent in total net absorption in office space between 2012 and 2013. Despite a drop in demand in 2013, the overall sentiments remain optimistic and most occupiers are committed to long-term growth. Leasing activities are anticipated to see a surge as political uncertainties go away and business sentiments, economic conditions improve domestically and much more definitively at the global level.
Key suburban markets like Outer Ring Road (ORR) and the adjoining areas and Whitefield etc are expected to remain active next year given a stable growth / outlook for the IT/ITeS, BFSI sectors. In addition, there is increased interest by private equity players for projects with strong fundamentals and Bangalore remains a bright spot in India for foreign investors as indicated by the trends from last 2 years.
An expected improvement in overall economic conditions in the second half of 2014 will result in increasing expansions by companies, which will propel the demand for office space. Net absorption is likely to increase by 31 per cent over 2014 and will be recorded at 29.5 msf. The cities to record majority of the net absorption will be similar to 2014, with Bengaluru, Mumbai, Delhi NCR and Pune leading the pack.
Tokyo is forecasted to see the highest office absorption among the 30 cities in Asia in 2014 expected to be recorded at 7.6 msf. It remains the region’s top location for office absorption and is followed by Bengaluru, India at 2nd position and Manila at 3rd, which are expected to witness 6.25 msf and 5.9 msf of net absorption in 2014.