Ahmedabad office space fails to keep pace

The last four editions of Vibrant Gujarat summits might have brought in investments in thousands of crores into Gujarat, but that has not reflected on the growth of office real estate sector in the state’s biggest city, Ahmedabad.

The city’s office real estate has not only failed to keep pace with the markets in other big cities of the country, it is also lagging far behind others in terms of new supply and absorption of office space.

Forget Mumbai, Delhi and other metro cities, Ahmedabad’s total office space supply in 2010 was less than one fifth of Hyderabad’s. This is according to a report of Cushman & Wakefield (C&W) that surveyed eight Indian cities. However, realtors still expect that the Vibrant summits will bear fruit in the coming years.

According to a recent C&W report, the supply of office space in Ahmedabad went up by 82% in 2010 when compared to 2009.
While the supply was 0.28 million square feet in 2009, it became 0.51 million square feet in 2010.

But despite the supply having increased, the absorption has decreased as compared to the previous year. The absorption of
office space in the city plunged by 6% in 2010 as compared
to 2009.

A look at the demand-supply position in various cities in 2010 says Ahmedabad, despite having around 40% excess supply, still lags behind the other cities in the country.

Mumbai and Bangalore have been the top providers of office space in 2010 showing a considerable increase over the previous year’s figures.

The C&W study reveals that the improved economic performance and business sentiments supported by able policy measures, financial discipline and domestic demand have helped the commercial office segment to recuperate from the aftermath of financial slowdown.

The office space demand over the next five years (2010-14) is expected to be 240 million square feet across India.