The Hindu Business Line : Demand for office space, rentals firm in first quarter: Report

New Delhi, April 23 The demand-supply dynamics in the central and alternative business districts in major cities remained relatively unchanged in the first quarter due to lack of new stock, and rentals and capital values are likely to remain insulated from downward pressure in the mid-term with new supply coming up only in the fourth quarter of the year.

The ‘MarketView India Office’ report of real estate consultant CBRE, however, pointed out that after multiple quarters of extremely restricted supply, high demand levels and double-digit value growth, the peripheral and suburban areas are finally expected to witness some correction this year.

Demand-supply gap

“The demand-supply gap is expected to be much closer this year, with some micro-markets even witnessing surplus stocks by the end of the third quarter 2008. This is a welcome development from an end-use perspective, especially for the large space occupants and would only lead to enhanced take-up in the medium to long term,” the report added.

‘cautious note’

CBRE said that the year 2008 had begun on a “cautious note” for the real estate sector. “The first quarter has been very eventful, to say the least. The stock market has come off its life-time high and is now trading at a substantial discount, news of the recessions in the US gets enforced on a daily basis and the Government/RBI efforts to curb rampant inflation are leading to a liquidity crunch in the market.

While all these are worrying signs for the Indian economy in the short term, the good news is that no one doubts the India story on a long-term basis,” it said.

The report said that demand for office space in the smaller formats was quite robust and as a result, rentals too remained firm.

SEZ space

“In a significant move for the real estate sector, the Urban Land Ceiling Act was repealed in Maharashtra.

This is expected to bring in some required, large land parcels for development. However, the impact of this on land prices remains to be seen,” CBRE said.

Towards the East, Kolkata too is witnessing a definite thrust towards SEZ space.

Improvements in physical infrastructure, with new flyovers being constructed is expected to positively impact travel time between the city and the suburbs of Salt Lake and Rajarhat, thus providing further impetus for companies to establish presence here, it added.

More Stories on : Real Estate & Construction | Marketing Research

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page