Office Space Absorption Increases While that of Residential Space Declines In Bangalore

What does the real estate situation say?

There is a noted increase in the absorption of the commercial and the office space in cities like Bengaluru but when it comes to residential space absorption the picture is just the opposite. Why is this paradox? Here is an analysis.

Office space absorption increases

There is a paradox noted in the commercial and the residential sector of the real estate situation in the IT capital. India as a whole has witnessed an increase of the office space absorption and Bengaluru tops the list in this. There is a whooping increment of 174 percent year-on-year of office spaces in Bengaluru as recorded in the first half of 2015. Pune is the second in the list with 162 percent. Markets like Delhi-NCR, Hyderabad, Ahmedabad and few others noted a decline in the office space absorption.

The experts note that although there are additional factors for the cities like Bengaluru to house more start-ups and the corporates to come to this city like infrastructure and resources there is another reason for this too. That is the rupee is devaluating and this is one of the reason for more and more outsourcing to India by the foreign countries.

The office and the commercial market are expected to grow a lot with a total absorption of 36.4 million sq. ft. of absorption by the turn of this year. This will tantamount to an increment of 18 percent absorption compared to the figures of 2014.

The picture in the residential sector

When it comes to the absorption of the residential apartments the picture is just the opposite. The residential sector of India was in the slow down which we all know. But there were few exceptions like Bengaluru and Chennai. But these are the cities that have joined the band wagon of late in the absorption of residential apartments and properties.

The statistics reveal that absorption rates of the residential apartments in the city of Bengaluru and Chennai has decreased and had become almost the half of the absorption figures of 2014.

Why is this paradox?

All the statistics collected and collated by the key consultant firms notes that there is a decline in the absorption rates of residential apartments in Bengaluru. The launches of the new projects also have fallen from an average of 11, 500 units per quarter to 7,100 per quarter as per the data of the third quarter of 2015. The experts and the market trend watchers opine that not enough of the jobs are being generated in Bengaluru in spite of being the most commercially viable city. The jobs that are generated in the BPO sectors or the E-commerce sectors are having mean salaries of Rs. 15, 000 to Rs. 20, 000 which is not enough for the huge investments of the realty sector. 

Source : articlesbase.com