Occupiers have turned more cautious on immediate growth plans as a result of moderate economic growth last year and negative investor sentiment. However, they remain bullish on medium term growth prospects and office real estate demand is likely to grow as economic conditions improve.
Most corporates are expected to firm up plans for expansion in the next few months with overall take-up forecast to grow in 2014, especially in the second half of the year.
Demand will be led by the IT/ITES sector followed by Manufacturing and BFSI sectors. Emerging industry sectors are also likely to play an increasingly important role in creating demand for office space.
The important factors influencing the location of growth of office stock in the country continue to be the ready availability of skilled manpower at the right cost. At a micro-market level, it is accessibility to transportation links and metro connectivity that drive supply.
A growing number of occupiers are now insisting on strict adherence to legal, safety and environment norms of office buildings and this has emerged as the overriding factor in location decisions. Consequently, this is likely to have a positive influence on the quality of office buildings in future.
Rents are expected to remain stable in most markets in the first half of the year, though there will be some variation between sub-markets in reflection of local supply and demand dynamics. The consensus view is that in most Indian markets, with the possible exception of CBD and New CBD in Mumbai, rents will start to increase in the second half of the year.
Source : DTZ (Groupe UGL)