Supply of offices plummets 44% in A’bad, demand stable

Though Ahmedabad holds promise as a potential realty destination, supply of offices in the city has plummeted in the last three months – reveals the latest report of real estate consultants, Cushman & Wakefield (C&W).

According to the quarterly report, supply of office spaces in Ahmedabad stood at 0.50 million sq feet for quarter ended June 2012, which decreased to 0.33 million sq ft in quarter ending September 2012.

Demand for corporate spaces, meanwhile, has remained stable from last quarter with the city registering absorption of 0.32 million sq ft. This is marginally less than the 0.33 million sq feet reported in quarter ended June 2012. However, the sustained demand is not on account of escalated buying, but reduction in supply, states the report. “Limited supply and attractive pricing has helped market maintain its vacancy levels at 10%,” states the report.

Talking of vacancy ratio of office spaces, Ahmedabad continues to have least of its offices empty among top-8 cities of India (see table). According to the C&W report, realty market has maintained its vacancy levels at 10%, which is same as the previous quarter.

The other seven cities have a vacancy ratio of at least 15%.
Nationally, 11.16 million sq feet of office spaces was supplied in Jun-Sept period, up from 9.8 million sq feet in the previous quarter. Absorption saw a marginal rise – from 7.61 million sq feet in Apr-Jun period to 7.78 million sq feet in third quarter.

“India’s office-market conditions are favourable for the corporate world at this time, as there is sizeable availability of ready and near-ready supply. Also, double-digit vacancy numbers helps in keeping prices stable,” said Sanjay Dutt, executive managing director (South Asia), C&W India.

Dutt believes that Indian office market will remain stable in short to medium term.

“We hope to see stable absorption, about 28-30 million sq feet by end of 2012. While IT/ITes remain largest in terms of volume of office space demand, sectors like telecom, consulting and others will drive the momentum in next few months,” said Dutt.