Compared to 2011, the office space absorption has fallen in Bangalore. Experts opine that the situation was the result of weaker demand from the IT and ITeS sectors.
Real estate experts said that the office space absorption in Bangalore has been dropped as the IT (Information Technology) and ITeS (IT enabled Services) did not raise much demand. The reports show that the office space absorption has dropped by 24% last year.
Cushman & Wakefield, a global real estate consultancy, reported that in 2012 nearly 7.3 million sq. ft. of office space was absorbed. This rate of absorption is very lower to the 9.59 million sq. ft. of 2011. If the IT and ITeS sectors had shared nearly three fourth of the total supply in 2011, in 2012 their absorption is just above two fourth of total supply.
Another real estate consultant Knight Frank revealed that the fall was severe in the second half of 2012 in which the office space was absorbed only at 56%. Meanwhile this was 74% in the second half of 2011.
Real estate consultancy firm DTZ India’s Co- head Mr. Satish B N said that the IT sector demand was fluctuating in overall level. Real estate analysts also linked the slowdown in global demand for IT services, directly to the lower demand by the IT and ITeS sectors.
According to Avinash Rao, Knight Frank’s regional director- South India, the European crisis and the sluggish economy of USA also had impact. Mr. Rao said that these have made the IT and ITeS sectors cautious.
Meanwhile the absorption was more by the other sectors and this has prevented a deeper fall by the commercial office space market. The rentals in Bangalore have shot up by 17 %. Other sectors, including manufacturing and banking & finance sectors, accounted nearly 11% of the total supply in 2012. It has to be noted that there was a steady decrease in the rate of vacant office space in the city.