According to industry experts, decline in supply of additional office spaces is likely to put pressure on rental values in the upcoming quarters, even as the demand is moderated.

Less than 3 million sq ft of office space was added in second quarter which is a dip nearly by 55 pc compared to the same period in 2012, and 79 pc compared to first quarter in 2013.

The demand for office space is likely to reasonable or low in certain cities, because big corporate are relocating to quality locations with lower rentals.

Owing to the slowdown in property activity, pent up supply has lined up various micro-markets over next 6-9 months, which might result in pressure on asset pricing

During the quarter, six major cities Delhi NCR, Bengaluru, Mumbai, Chennai, Kolkata and Pune recorded a swelling rental space absorption of 7.5 million sq ft, which is 25 pc less than 9 million sq ft compared to last year.

The declining demand is a reflection of the prevailing low business and investor confidence. Due to the slowdown in the economy and the political uncertainty in the country, companies are deferring their decision to take up real estate.

Mumbai commercial market recorded occupancy of around 7.3 lakh sq ft of Grade A office space, only a few mid-sized transactions were settled in Delhi resulting in 2.1 lakh sq ft of Grade A office space absorption during the quarter.

Absorption in Gurgaon was around 1.8 million sq ft, while Noida witnessed 4.8 lakh sq ft, which was primarily from IT/ITeS sector followed by banking and financial services sector.

The Chennai market observed hike in demand this quarter with overall engagement of Grade A office space about 2.12 million sq ft.

Kolkata’s market remained lethargic due to the negative economic scenario and recorded absorption of nearly 1.9 lakh sq ft, while steady occupier demand from the IT/ITeS sector kept Pune’s office market steady during this third quarter as the absorption in the city stood at 9.2 lakh sq ft.

In spite of moderate demand, rental values are expected to remain steady as developers are abstained to add more dicey supply in the slow market.