Demand for investment-grade office space across leading cities in India slowed down in the first quarter of 2014, with around 6.3 million sq. ft. of Grade A office space getting absorbed The market saw slow transaction activity and a low level of new completions in the first quarter; and leading cities continued to experience caution from corporate occupiers in the first three months of the year. While the Kolkata commercial real estate market attracted reduced demand for office space during the first quarter, enquiry levels from prospective corporate occupiers indicate that office transaction activity is likely to pick up in the coming months. On the supply front, the peripheral locations of the city are likely to witness significant supply addition by the end of 2014; and office space rental values are expected to remain stagnant across most micro-markets of Kolkata in the coming months.
During the first quarter of 2014, Kolkata’s Central Business District (CBD) of Chowringhee, B.B.D Bagh, Park Street and CamacSreet witnessed a low level of commercial leasing activity in the first quarter. On the supply front, around 30,000 sq. ft. of office space was added to the existing stock; resulting into a marginal increase in vacancy levels. Rental values remained largely stable in this micro-market.
Kolkata Office Market Rental Trends
Source: CBRE Reserach
The secondary micro-markets of EM Bypass, Kasba–Gariahat, Topsia and Sarat Bose Road saw sluggish transaction activity during the quarter. There was no addition to the office stock in this micro-market; and vacancy levels remained largely stable over the previous quarter.
The peripheral micro-markets of Salt Lake and Rajarhat observed a decrease in demand for office space, with office space absorption recorded at 37,000 sq. ft. in the first quarter of 2014, as compared to 55,000 sq. ft. recorded in the previous quarter. There were no significant project completions in this micro-market during Q1 2014. Vacancy levels remained high, and were estimated in the range of 18–20%.
Kolkata Office Market Rental Indicators: Q1 2014
Source: CBRE Reserach
The author is CMD, CBRE South Asia Pvt. Ltd.
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