New Delhi: Office space leasing fell by 25 percent during 2012-13 fiscal at 5.8 million sq ft due to uncertainties in the global economy and slowdown in IT/ITeS sector, global property consultant Knight Frank said on Tuesday.
"The NCR office market showed steady absorption levels in H1 FY13 followed by a dip in H2 FY13. The city's office market clocked absorption of approximately 5.8 million sq ft during FY13, falling short by 25 percent compared to FY12," Knight Frank said in a report.
The consultant noted that impending uncertainties over the global economic scenario have lent a cautious outlook to the market and office space demand has been restrained in FY13 compared to FY12 in most major cities of the country, NCR being no exception.
"While the NCR market has a well-diversified office occupier base, the IT/ITeS sector contributes to about 42 percent of the total office demand. Hence, a slowdown in the IT/ITeS industry has adversely impacted demand," the report said.
According to Knight Frank Research, 1.07 million sq ft of office space was transacted in Q4 FY13, thus showing a fall of 11 percent compared to the same quarter last year.
American Express, Fiserv, Jacob?s, HCL, Micromax and Google were the top space occupiers in Q4 FY13 and accounted for approximately 75 percent of office absorption.
In Q4 FY13, about 89 percent of the total office space transacted in the NCR was taken up in Gurgaon and Noida, the report added.
On the outlook, Knight Frank said that corporate leasing activity is expected to remain muted in the coming quarters.
"Majority of the office space demand is expected to come from relocation and consolidation as companies are deferring there expansion plans. IT/ITeS giants are concentrating on their existing real estate portfolio and working towards improving the current space efficiencies," the report said.
The office space supply is expected to be constrained as there are delays in the execution of commercial projects in the peripheral business districts of Noida and Gurgaon, leading to limited options for tenants.
Consequently, the consultant sees rental appreciation in the coming quarters in certain established micro-markets within Noida and Gurgaon.