The market experts of Jones Lang LaSalle (JLL) India have shared their expectations for the office leasing markets in Asia Pacific for the second quarter of the year 2012. According to JLL India’s survey report, there will be slow growth in Grade A office rates in Indian cities like Delhi and Mumbai.
The demand for office spaces has gone up slightly after an extended period of sluggish growth during the last fiscal.
According to a recent survey conducted by the Royal Institution of Chartered Surveyors (RICS) titled ‘Indian Commercial Survey’, even though the demand for office space still remains relatively sluggish, there has been some uptake in absorption during this quarter as compared to previous months.
Echoing a similar sentiment Anuj Puri, chairman and country head at JLL India,“With the Indian financial economy’s cues not being very encouraging, office occupiers continue to defer expansion plans across major Indian cities. The trend of slowdown in growth of office rentals witnessed in Q1 across Mumbai, Delhi and Bengaluru continues in Q2. Given the pressure, we expect rentals to remain stable for most micro-markets. Mumbai and Delhi are expected to add significant office supply over the next six quarters, and we have started seeing increasing signs of delayed construction. The next two quarters will decide if the supply side can appropriately accommodate the demand slowdown. However, on a macro scale, the Indian office asset story remains on a positive trajectory as compared to most Asia Pacific office markets.”
Grade A office rents in Delhi is expected to grow 0–1% in Q2 of 2012. Companies are expected to increase their interest in office space in the Secondary Business Districts, though the suburbs will continue to offer competitive rents, thus providing an alternative location to firms looking for new office space. The expectations for the city of Mumbai will however be marginal. Developers are likely to refrain from increasing rents to encourage occupiers to finalise transactions that have been on hold for some time.