kolkata office market overview jan 2015
TRANSCRIPT
1 Research & Forecast Report | January 2015 | Colliers International
Market is likely to remain stagnant in 2015The Kolkata office occupier market continually remains subdued for the second consecutive year as a result of the policy level issues, with total absorption totalling around 1.66 million sq ft in 2014. This figure is similar to the 2013 levels. The primary contributor of this demand was BFSI with around 25% share, followed by IT/ITeS with 21% and the construction sector with 16%. Major transactions include the purchase of large office spaces by local companies and leases of about 40,000 sq ft by Serco Global, 30,000 sq ft by KPMG and 29,000 sq ft by British Telecom.
Due to weakening demand and policy level stagnancy, developers deferred their projects and only about 1.14 million sq ft of prime office space was added to the city office space. Major completions this year include Merlin Infinity measuring 0.43 million sq ft and Martin Burn Business Park consisting of 0.4 million sq ft office space. Most of the projects completed this year are located in Sector V/New Town. Around 16 million sq ft of office space is at various levels of construction in the city, and is expected to be completed by 2017.
Grade A office rents in Kolkata have continued on a downward trend and declined by 7% YoY in the face of relatively weak demand. Capital values showed mixed trends across the city, with the CBD registering 3% increase YoY on the back of domestic investor demand. Peripheral locations like Sector V and New Town recorded a 16% YoY decrease.
Limited supply addition and below-average absorption kept the vacancy on the same levels.
For the first time in Kolkata, the local government reduced
City Office Barometer
Research & Forecast Report
Kolkata | OfficeJanuary 2015
Rental Values
*Indicative Grade A rents in INR per sq ft per month**Park Street, Camac Street, Chowranghee Road, AJC Bose Road***EM Bypass, Topsia, Ruby****Salt Lake, Rajarhat
MICRO MARKETS RENTALVALUE*
% CHANGEQoQ YoY
CBD** 85 - 115 -5% -11%
SBD*** 65 - 75 -7% -7%
Sector V/ New Town 42 - 50 0% -6%
PBD**** 34 - 35 -1% -4%
INDICATORS 4Q 2014 1Q 2015 F
Vacancy
Absorption
Construction
Rental Value
Capital Value
2 Research & Forecast Report | January 2015 | Colliers International
the circle rate in the range of 8% to 33% across the city to streamline property valuation by reducing discrepancies between registration price and actual market value of properties.
Looking at the weak demand, developers refrained from launching new projects. Hence, no major new project was launched in 2014. This further created an impact on the rents as it declined by 7% YoY on the average across all the micromarkets, except in SBD locations like EM Bypass, Topsia and Ruby, where rents remained stable. Similarly, capital values declined in Sector V and New Town by 10% YoY but it rose by 8% YoY in the CBD due to robust demand by local companies. All other micromarkets remained stable.
Trends to watch for in 2015:
The next year is expected to remain stagnant until the city receives a boost at the policy level. Developers will refrain from completing their projects until they see a strong signal of improving demand. The market will remain tenant favourable and rents may decline further in peripheral locations due to robust under-construction developments in the pipeline. However, rents for prime office spaces located in the CBD will remain unaltered due to consistent demand and limited supply in this location.
Source: Colliers International
Top 5 Transactions of 2014
Key Under Construction Projects
CLIENT BUILDING NAME AREA (SF) LOCATION LEASE / SALE
Mount Hill Realty Godrej Water Side 70,000 Sector V/ New Town Sale
RDB Group Godrej Water Side 70,000 Sector V/ New Town Sale
Serco Global BIPL 38,000 Sector V/ New Town Lease
KPMG Godrej Water Side 30,000 Sector V/ New Town Lease
British Telecom DLF-II 29,351 Sector V/ New Town Lease
BUILDING NAME DEVELOPER AREA (SF) LOCATION POSSESSION
Mani Twin Mani Group 1,800,000 Rajarhat 2015
Technopolis 2 Forum Projects 1,200,000 Bantala 2015
Magnacon Infinity Group 740,000 Salt Lake 2015
Notes:
1. Office Market: The major business locations in Kolkata are CBD (Park Street, Camac Street, Chowranghee Rd, AJC Bose Rd), East Kolkata (EM Bypass, Topsia, Ruby), Salt Lake/
Sector V and New Town / Rajarhat.
2. Rents/Capital Value: Market average of indicative asking price for Grade A office space.
3. Available Supply: Total Grade A office space being marketed for sale or lease in surveyed quarter.
4. City Barometer: Represents increase, decrease or stable scenario; as compared to previous quarter.
5. All the figures in the report is based on market information as on 25th December 2014.
Average Rental And Capital Value Trend
8,000
10,000
12,000
6,000
4,000
2,000
0
120
100
80
60
20
40
0
Forecast
New Supply, Absorption And Vacancy Trends5 25%
20%
15%
10%
5%
0%
4
3
2
1
02010 2011 2012 2013 2014 2015F 2016F
New Supply (In Mln sqft) Absorption(In Mln sqft) Vacancy(In %)
2008
2009
2010
2011
2012
2013
2014
2015
2016
Rent
al V
alue
s IN
R Pe
r sq
ft P
er M
onth
Capi
tal V
alue
s IN
R Pe
r sq
ft
About Colliers International
colliers.com
63 countries on 6 continentsUnited States: 146 Canada: 44 Latin America: 25
186 EMEA: 84
$2.1billion in annual revenue
1.46billion square feet under management
15,800professionals
Primary Authors:
Surabhi Arora Associate Director | Research +91 124 456 [email protected]
Sachin Sharma Assistant Manager | Research
Amit Oberoi I National DirectorValuation & Advisory Services & Research
For O�ce Services:
Swapan DuttaSr. Associate Director | O�ce [email protected]
Colliers International
Level 18, Plot G - 1, Block EP & GP, Salt Lake Sector V,Kolkata – 700091 | India
485