Real estate leasing by companies in information technology and IT-enabled Services, a driver for office realty, is showing a downtrend in Mumbai and the National Capital Region during the current year.
However, Bengaluru is on a high with the share of IT/ITeS in the total office space transaction rising from 55 per cent in 2011 to 75 per cent till May 2012, according to data by DTZ, an international real estate research firm.
In Mumbai, the IT/ITeS share in total leasing declined from 45 per cent in 2010 to 18 per cent in 2011 and 11 per cent till May.
This could be attributed to the weak economy and outlook of the US and Europe, resulting in a decline in outsourcing to India.
"Real estate demand is, hence, contingent on better order books of IT/ITeS companies", said DTZ India CEO Anshul Jain.
"The banking and financial services category led the office space transactions in Mumbai, while IT/ITeS took a backseat. BFSI contributed 33 per cent to the total transactions in 2011 and 28 per cent in 2012 so far.
|TECH FIRMS' FOOTPRINT IN OFFICE REALTY|
|* Bengaluru IT/ITeS share in total office pie up to 75 per cent in first half of 2012, from 55 per cent in 2011|
|* Mumbai's IT/ITeS share down to 11 per cent in 2012, from 18 per cent in 2011|
|* BFSI contributed 33 per cent to the total transactions in 2011 and 28 per cent in 2012 so far in Mumbai|
|* NCR's IT/ITeS share in the total space take up at 34 per cent, down from 42 per cent in 2011|
|* In NCR, manufacturing space share rises to 11 per cent in 2012, from 7 per cent last year|
|* In Mumbai, manufacturing space take-up rose to nine per cent in 2012, from six per cent last year|
IT/ITeS, which constituted 42 per cent of the total office space take-up in 2011 in NCR, made up 34 per cent of the total in the first half of 2012.
"IT companies are going slow with their expansion plans and the mode will continue till the economic conditions stabilise to some extent," noted Jain.
However, it is the manufacturing sector which is displaying a consistent rise in the total leasing across NCR and Mumbai.
In NCR, manufacturing sector leased 11 per cent of the total in 2012 till now, up from seven per cent last year.
In Mumbai also, manufacturing space take up rose to nine per cent in 2012 from six per cent last year.
Colt, Stryker, Bombardier, DHR Holdings and Hitachi are a few major companies in the manufacturing segment that have taken up space this year.
On the whole, Mumbai's office transactions dropped 31.25 per cent in area terms in 2011 calendar year, compared to 2010.
Total area leased for office space fell from 6 million sq ft in 2010 to 5.5 million sq ft in 2011 in the commercial capital. Other major markets like NCR and Bengaluru saw an increase in the office space take up in 2011, but Hyderabad and Pune saw a drop, according to the data compiled by DTZ.
The reduction of office space transaction in Mumbai can be attributed to the cautious sentiments ruling the minds of the occupiers, said Jain.
Bengaluru's office space take-up rose to 10.8 million sq ft in 2011, from 8.1 million sq ft in 2010 and 4.4 million sq ft in 2009.
The NCR market also showed a sustained increase to 6 million sq ft in 2011, up from 5.2 million sq ft in 2010 and 4.4 million sq ft in 2009.
Kolkata, which has not been a big office market, showed a 420 per cent increase in office transactions in area terms, from 0.5 million sq ft in 2010 to 2.6 million sq ft in 2011.
In 2009, the total office area transaction was of 0.6 million sq ft. Cognizant and Ericsson's space lease of 0.3 million sq ft and 0.35 million sq ft respectively in Kolkata are the two major deals of 2011 for the city.
Kolkata provides access to high-quality talent pool coupled with quality infrastructure (especially buildings with large floor plate size ideally suitable for IT/ITeS operations) at a competitive cost, said the CEO.
Would Kolkata be able to sustain the 2011 boom in office market? It all depends on development of physical infrastructure along with policy streamlining, which are the prerequisites at this stage, said DTZ.
The IT/ITeS industry is estimated to grow at 11-14 per cent in financial year 2013, as opposed to 16-18 per cent in FY12, according to Nasscom.
IT companies have also put off campus recruitments by three months to September 2012 due to the slowdown.
On the outlook for the overall office market in India, Ravi Ahuja, executive director, office transactions, Cushman & Wakefield India, said, "Due to the economic condition, developers may find it a bit slow to lease their office spaces and may remain hard-pressed due to liquidity issues.
"In the next quarter, we will see that occupiers wanting to consolidate their scattered operations within a city will remain committed to signing up for quality and reasonably priced spaces, while those with expansion plans will wait and watch to see how the economic conditions pan out -- nationally and internationally", said Ahuja.