Asian office space market remains gloomy

“The Bandra Kurla Complex and Kalina districts of Mumbai, for example, saw overall vacancy levels rise to 29.4 per cent, while vacancy levels in Noida in the National Capital Region hovered at around 40 per cent,” real estate consultancy CB Richard Ellis (CBRE) said in its Asia Market View Q2-2009.

The report said the election of a new government and falling interest rates improved local business sentiment during the second quarter in India.

However, despite small signs of improvement, cities like Mumbai, Delhi and Bangalore witnessed a slide in office rentals due to an exodus of occupants from the CBDs as corporates moved to alternative locations as a cost cutting measure.

“While the second quarter of 2009 observed some improvement in the office-space market with levels of enquiries going up, vacancy levels continued to remain high.” CBRE Chairman and MD (South Asia) Anshuman Magazine said.

He said there is an improved level of activity in the sector but the markets are expected to remain soft in the short to medium term.

CBRE said the overall Asian market has started showing signs of stability in the second quarter of 2009 but companies remain focused on reducing costs and tightening their real estate expenditures.

“Most Asian cities either recorded a smaller negative net absorption or a mild increase in office requirements. Overall vacancy for Asian cities rose 60 basic points quarter-on-quarter to 12.5 per cent in the second quarter, but the rate of increase slowed from 120 basic points in the previous quarter,” it said.

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