82% of stakeholders are positive towards new office supply additions in the next six months.
In the latest survey – Knight Frank – FICCI – NAREDCO – ‘Real Estate Sentiment Index Q3 2019’ real estate stakeholders have expressed an optimistic outlook for office sector, backed largely by a robust office supply pipeline for the next six months. This contrasts with the sentiments towards the residential sector which is recorded to be ‘pessimistic’ for the same period.
The office segment has had a strong run in the first half of 2019 with leasing as well as recording new supply completion recording a decadal high of 27.4 million square feet and 24 million square feet respectively. The stakeholder sentiments therefore have been strong for this asset class with 80% of respondents reacting positively towards growth. A similar quantum of respondents said that rental values will remain also stable with a positive bias in the next six months.
OFFICE MARKET OUTLOOK: SECTOR HOLDS STEADY
• Sentiment regarding the outlook for the new office supply is strong, with 82% of the respondents believing that the coming six months will see new supply additions across the major office markets in the country.
• The outlook for the office leasing activity remains unchanged in Q3 2019, with 79% of the stakeholders opining that leasing activity will remain steady or may even improve in the coming six months.
• Stakeholder outlook with regards to future rental appreciation has dipped in Q3 2019 with 79% of the stakeholders expecting rents to either remain stable or inch upwards as against the thumping 87% in the preceding quarter. The sentiment, however, is in the positive zone and stakeholders expect rents to inch up in quality office space.
Gulam Zia, Executive Director– Valuation & Advisory, Retail & Hospitality, Knight Frank India said “The office market has been growing steadily across India with strong record of transactions each successive year. Mumbai witnessed record half-yearly growth in transactions led by occupiers in BFSI and other service sectors. While the city level vacancy remains elevated, we have a scenario where preferred markets in the city have significantly low vacancy level. SBD Central has been witnessing significant growth in occupier interest over the past few years and would soon join the list of tight supply markets like BKC and Central Mumbai.”