Even as sales of residential units were under pressure and fell to multi-year lows in 2017, office space segment presented a totally different story altogether with a massive jump in transactions, an industry report said.
Real estate consultant Knight Frank said that office space transactions in Ahmedabad surged by 53% from 0.95 million sq feet (msf) in 2016 to 1.46 million sq feet in the just concluded year. Office space completion shot up from 1.67 msf to 2.92 msf, a rise of 75%.
"The massive jump in transactions was due to the availability of good quality office space at highly competitive rates. 2017 was also the first time that transacted office space in Ahmedabad crossed 1 million sq feet," Balbirsingh Khalsa, director-Ahmedabad, Knight Frank, said.
The rise was in spite of demonetisation, and regulatory changes such as Real Estate Regulatory Authority (RERA) and Goods and Services Tax (GST). Khalsa said that developers had focused on office space projects due to a slowdown in the residential segment.
However, the inclusion of Gujarat International Finance Tec-City (GIFT City) in Gandhinagar, home to the country's first and only International Financial Services Centre (IFSC), boosted the office space numbers. "GIFT emerged as a major office market, attracting a large number of banking, financial services, insurance, broking, and other sectors. SG Highway continued to be a major market in 2017, with offices even as big as 2 lakh sq ft being transacted. CG Road also saw major transactions," said Khalsa.
However, higher office space availability has led to a situation where supply outstripped demand, which resulted in vacancy levels going up sharply in the year.
Knight Frank said that vacancy level touched 23.6% in 2017, as against 19.6% in 2016 and 17.5% in 2015. "The office market is on an upward trajectory. Going ahead, we expect demand to remain strong from various sectors," said Khalsa.
The report also mentioned that share of manufacturing sector in office space had fallen from 26% to 8% in the second half of 2017, while that of banking, financial services and insurance had gone up from 35% to 42%. IT and ITeS also saw strong demand for 14% share.
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- Rise was in spite of demonetization, and regulatory changes such as RERA and GST.
- Report mentioned that share of manufa-cturing sector in office space had fallen from 26% to 8% in second half of 2017, while that of banking, financial services and insurance had gone up from 35% to 42%.
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