'Optimistic outlook' for city office realty biz: Report

Kolkata: Real estate stakeholders in the city have expressed an optimistic outlook for office sector, backed largely by a robust office supply pipeline for the next six months. This contrasts with the sentiments towards the residential sector which is recorded to be not so optimistic for the same period. This was revealed in the latest survey — ‘Knight Frank-Ficci-NAREDCO - Real Estate Sentiment Index Q3 2019’ last week.

According to report, the office segment has had a strong run in the first half of 2019 with leasing as well as recording new supply completion recording a decade high of 27.4 million sq ft and 24 million sq ft respectively. “The stakeholder sentiments therefore have been strong for this asset class with 80% of respondents reacting positively towards growth. A similar quantum of respondents said that rental values will remain also stable with a positive bias in the next six months,” the report added.

It has pointed out that the sentiment regarding the outlook for the new office supply is strong, with 82% of the respondents believing that the coming six months will see new supply additions across the major office markets in India.

Commenting on Kolkata market, a Knight Frank official added that it has registered a total of 14 office leasing deals in the July to September quarter . Total area leased in Q3 2019 accounted for 196,135 sq ft. In terms of area, Salt Lake Sector-V has been the favourite destination for office space occupiers, accounting for approximately 78% of the office leased in the July to September quarter. EM Bypass-Rashbehari Connector, Dalhousie and Newtown were the other favoured destinations for office space occupiers.

According to KF, in Q3 2019, the maximum take-up was noted by the information technology and information technology enabled services (IT/ITeS) with a share of 64% (9 deals) of the overall leasing activity, followed by a deal each seen in manufacturing, insurance, real estate, medical and legal sectors.

Swapan Dutta, branch director-Kolkata, Knight Frank India, said, “In Kolkata, the office space demand has been steadily picking up since the first quarter, 2019, and its largely driven by enquiries riding on multiple small sized space take-ups or transactions below 50,000 sq ft (4,645 sq mt) in the absence of large IT sector occupiers. Tenants, bulk of whom consists of consulting, finance and manufacturing are consolidating their workspaces due to prevailing low rental and in the micro markets of Salt Lake and New Town, Rajarhat.”

Merlin group chairman Sushil Mohta feels that there is a marginal improvement in offtake of office space in the city. He strongly opined that a little bit of push and drive from state government would pull the demand even more. “Kolkata is comparatively cheaper than other metro cities and the infrastructure has also improved here. So all the necessary ingredients are there. A little bit of push further can do wonder,” he added. Credai national president-elect H V Patodia also believes that Kolkata is doing better than the last year.