IT firms set to drive office leasing segment: Report
Office space leasing volume touched an all-time high of 60.6 million square feet in 2019
The sentiment for office leasing segment has been high due to strong performance and firm rental values backed by a surge in leasing activity by IT firms and it is expected to remain 'optimistic' going forward, according to a new report by Knight Frank-FICCI-NAREDCO titled 'Real Estate Sentiment Index Q4 2019 (October – December)'.
Office space leasing volume touched an all-time high of 60.6 million square feet in 2019. New completions also increased by 56% year-on-year in 2019, to 61.3 million square feet, marginally surpassing demand, the report said.
Real estate stakeholders have continued to express an optimistic outlook for the office sector for the first half of 2020. This is backed by the tremendous growth that the India's office sector has been witnessing in the last few years.
The office market outlook for the fourth quarter of 2019 is also expected to be positive. Stakeholder sentiment regarding the outlook for office leasing remained strong, with 88 percent of respondents opining that leasing activity will either improve or remain the same, the report said.
The outlook for new office supply remained positive, with 95 percent of the stakeholders expecting supply to remain same or increase across geographies, it said.
Stakeholders' outlook with regards to future office rental appreciation also remains positive, with 91 percent of the stakeholders expecting rentals to either remain or even appreciate in micro markets with high demand.
"The stakeholder sentiments for office segment has been high due to strong performance and firm rental values allowing investors to make mid to long term investments with healthy rental incomes. Further, as we see, the revival of the Information Technology segment in India in the last few years has been creating strong demand for quality office space. India is now fast becoming a centre of high-end IT services and engineering with data centres, R&D centres and other important functions being based within the country," said Shishir Baijal, Chairman and Managing Director, Knight Frank.