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Office demand continues to grow pan-India: RICS survey


RICS a global professional body that promotes standards and chartered qualification in real estate & construction said office demand has continued to grow for the last seven quarters reiterating solid demand for office real estate.

The office sector in India has continued to outperform with both tenant and investor showing strong appetite. However, retail, which is still growing at a slower pace, has lagged behind office space demand for several quarters now, according to the Q4 2015 RICS India commercial property monitor.

This is reflected in expectations for the next 12 months with rents and capital values for prime offices projected to grow more rapidly.

“Office demand for the last several quarters has been seen improving and is expected to continue in the same direction, this year as well. In fact, the demand for Grade A office space is outstripping supply, with many new Indian startups in the tech space, global MNCs, IT and telecom companies expanding operations in India. This is definitely a good trend, one which we hope to see continue. On the policy side, with the union budget announcements expected later this month, we look forward to the Govt. providing further clarity on REIT’s taxation and granting infrastructure status to the realty sector. There is also expectation around the implementation of GST, as this would significantly impact growth in the commercial sector.” said Devina Ghildial, MD – South Asia, RICS.

For India to continue to perform strongly in 2016 in the commercial space, the respondents to the survey strongly recommended granting of the infrastructure status to the real estate sector as that would lead to easy and cheaper debt to real estate developers helping them in construction and delivery of projects in time. In India, delay in delivery of realty projects is the number one challenge faced by developers, which leads to cost escalations which are then passed on in part to end-users.


REITs, an effective way to unlock rent-yielding property’s value have been announced for some time by the Indian Govt. but there have been no takers yet due to confusion in taxation. If attractive tax norms are announced for REITs in the upcoming Indian budget, it will lead to a major boost for the Indian commercial sector.

Implementation of GST is also extremely important for the commercial sector to continue to perform. The proposed shift to the GST regime is expected to impart greater transparency through market mechanisms and make Indian markets more investor-friendly to global investors.

For 12-month capital value and rent expectations, prime office space continues to see strong demand and growth.

In fact, India is the only member of the ‘BRICS’ nations to record positive values for each index surveyed, effectively bucking the downward trend of this group.  A number of emerging markets continue to struggle with China, Brazil, Russia and South Africa all posting negative readings for both Occupier Sentiment Index (OSI) and Investment Sentiment Index (ISI) measures.

In China, demand from investors has now declined in each of the last four quarters according to the RICS indicator, while the supply of property continues to rise.