New Delhi: Net office space leasing fell by 7 per cent to 30.57 million sq ft in top 8 cities during 2017 on lower supply and concerns about protectionist policies of some countries at the beginning of the year, according to property consultant Cushman & Wakefield report.
These eight major cities are Delhi-NCR, Mumbai, Kolkata, Chennai, Pune, Bengaluru, Hyderabad and Ahmedabad.
"The total net absorption of office space for top 8 Indian cities is recorded 30.57 million sq ft for 2017. This is lower by a minor 7 per cent over last year," the report said. The consultant attributed this to a drop in supply by 18 per cent resulting in shortage of quality spaces.
The year also saw 50 large leasing transactions, which were over 1,00,000 sq ft each in 2017. "The beginning of the year saw a slowdown in momentum in office leasing, due to numerous reasons.
Last year's Brexit and Donald Trump's election as the US President were expected to have an adverse impact on commercial office leasing in India, which depends very heavily on global outsourcing activities," the report stated.
Even countries like Australia, Singapore and a few others, C&W said, announced protectionist policies that had dampened business sentiment at the beginning of the year. However, leasing activities turned favourable in the second half, making net absorption inch closer to the previous year's volumes.
Chennai (+38 per cent), Pune (+18 per cent) and Mumbai (+9 per cent) posted growth in net leasing activities. Chennai recorded leasing of 27.82 lakh sq ft while Pune and Mumbai saw absorption of 38.58 lakh sq ft and 36 lakh sq ft, respectively. However, Bengaluru saw a decline of 30 per cent in 2017, mostly due to low supply.
Still, the city remained the largest office market in volume terms, recording over 8.6 million sq ft of net absorption in 2017. In Delhi-NCR, the leasing activities stayed flat at 41 lakh sq ft during 2017.
"The office leasing trends have been positive in the second half 2017 as global and national uncertainties settled," C&W India Country Head and MD Anshul Jain said.
By the second half, Jain said, it was clear that impact of events such as Brexit, US Fed rate revision, GST implementation and RERA in India is going to be minimal on growth of the commercial real estate sector.
"India's focus on creating an attractive and lucrative business environment has created significant impact. With India's rise in position in ease of doing business, investor confidence is set to grow," he added.