Office a bright spot for Indian property sector: survey

Residential segment meanwhile languishing in the doldrums

Mumbai skyline. Towering Goals/Shutterstock

Indian market sentiment towards new office supply is expected to remain strong, according to a joint survey by Knight Frank India, the Federation of Indian Chambers of Commerce and Industry (FICCI), and National Real Estate Development Council (NARDECO) via ANI.

Key office markets across the country will continue their momentum in the second half of 2019, 83 percent of respondents believe.

Transacted spaces for office leasing hit a record 2.6 million square metres (27.4 million square feet) in the first six months of 2019 due to demand from IT/ITeS and co-working spaces, Knight Frank reported. “Stakeholder outlook with regards future rental appreciation remains upbeat in Q2 (April to June) 2019 with 86 percent of the stakeholders expecting rents to either remain stable or inch upwards in quality office space in key locations due to limited options.”

More: Indian cities now home to 2m empty residences

The sanguine sentiment for Indian offices comes amid ongoing doldrums in the residential segment. “The overall slowdown in economy coupled with factors like the non-banking finance companies (NBFCs) crisis, developer defaults and bankruptcies have slackened the sentiments of sector, especially for residential segment,” researchers stated.

The industry appears to be exercising caution for the rest of the year, with respondents posting a future sentiment score of 52 in the second quarter of 2019, down from 63 in Q1 2019.

Developers in particular reported a sentiment score of 52 in Q2, down from 64 in Q1, while that of financial institutions dropped from 64 in Q1 to 48 in Q2.