Across India, top eight property markets created a record by absorbing 12.5 million sq ft during the first half of 2017. 57% of the total net absorption was recorded in between January to June, 2017. The city, among these top cities which registered a year-on-year growth of over 110% in the first half of 2017 is Chennai. Due to a slow start by the end of March, other cities registered an on-year decline in net absorption during the period. According to reports, the reason behind the slowdown of net absorption in 2017 is tapering supply, while there were some cases of consolidation/relocation of office spaces by occupiers which will lead a healthy leasing activity by the end of the year.
IT-BPM and BFSI occupiers are the leading cause that leasing activity is at the pace in the second quarter, reason being the large transactions with them, while the IT-BPM sector continues to be the primary demand sector. IT-BPM and healthcare sectors in Hyderabad, Gurgaon and Bengaluru has encouraged occupiers to pre-commit for office spaces due to limited availability of quality supply which will results increased activity about three times.
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In the first half of 2017, the total supply was 10 million sq ft approximately. Chennai experienced an increased supply of 32% from a year ago, as reports said. Moreover, by the end of the year, there are expectations of a healthy net absorption of 32 – 35 m. sq. ft. According to reports, the speed of absorption can be expected to continue if pre-commitments will reach close to 6 million sq ft.