Market Sentiments for Office space remain positive despite overall ’pessimist’ outlook

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22nd Knight FrankFICCINAREDCO Real Estate Sentiment Index Q3 2019

82of stakeholders are positive towards new office supply additions in the next six months

Bengaluru, October 30, 2019In the latest survey – Knight Frank – FICCI – NAREDCO – ‘Real Estate Sentiment Index Q3 2019’ real estate stakeholders have expressed an optimistic outlook for office sector, backed largely by a robust office supply pipeline for the next six months. This contrasts with the sentiments towards the residential sector which is recorded to be ‘pessimistic’ for the same period.

 The office segment has had a strong run in the first half of 2019 with leasing as well as recording new supply completion recording a decadal high of 27.4 million square feet and 24 million square feet respectively. The stakeholder sentiments therefore have been strong for this asset class with 80% of respondents reacting positively towards growth.  A similar quantum of respondents said that rental values will remain also stable with a positive bias in the next six months.

OFFICE MARKET OUTLOOKSECTOR HOLDS STEADY

  • Sentiment regarding the outlook for the new office supply is strong, with 82% of the respondents believing that the coming six months will see new supply additions across the major office markets in the country.
  • The outlook for the office leasing activity remains unchanged in Q3 2019, with 79% of the stakeholders opining that leasing activity will remain steady or may even improve in the coming six months.
  • Stakeholder outlook with regards to future rental appreciation has dipped in Q3 2019 with 79% of the stakeholders expecting rents to either remain stable or inch upwards as against the thumping 87% in the preceding quarter. The sentiment, however, is in the positive zone and stakeholders expect rents to inch up in quality office space.

Outcome of the latest sentiment index has been in line with the commercial market trendThe positive trend indicates that the demand is strong, and supply scenario is expected to progress in the coming 6 monthsWe are also witnessing the rental appreciation has dipped down for most of the mature micro markets as they are at all-time high and moreover, it needs to be in line with the global rental averagesAs far as the Bangalore commercial market is concerned, we expect the year (2019to close at an alltime high commercial transaction volume, said Shantanu Mazumder, SrBranch Director, Bangalore, Knight Frank India.