India INC Moves Ahead with Expansion Plan despite Slowdown Blues

April 20, 2009	(Be the first to rate this story!)  Loading ...
Print This Story   Email This Story Subscribe Newsletter

India Inc is not holding back its plans. At a time when the real estate sector has hit rock bottom, a new study by global real estate consultancy DTZ says that 46% of companies are still planning to expand their office space. While only 25% are contracting, 29% of them are not planning any movement right now. Though the expansion by companies may come as a surprise given the prevailing market conditions, the objective is simple. Various strategies to increase efficiency of office space are being implemented by India Inc. Space optimization, relocation, uplocation and future outlook are some of the key strategies being looked at this time.

DTZ interviewed corporate real estate heads of 48 companies, mostly MNC’s across Delhi, Mumbai and Bangalore. Various sectors such as IT/ITeS, BFSI and others including media & entertainment and manufacturing such as Motorola, Nokia, Religare, Aviva and Deustche Bank were taken into account for the study. Anshul Jain, CEO – India, DTZ International Property Advisers, says that majority are expecting the market to bottom out after six months, which signifies their intent to take up space in the long run.

Agrees S K Sayal CEO, Alpha G Corp, “There has been a general slowdown but corporate which are expanding are still looking at taking more space. In certain micro-markets many retail spaces saw conversion into office space for quick revenue returns due to continued and increasing demand for office space in certain micro markets. In fact this particular trend is expected to continue in the coming few quarters too.” Renegotiation and relocation of corporate were some of the other trends which the study identified. As far as renegotiation is concerned, as many as 70% of the occupiers are intending to renegotiate nearly 10% to 15% on their base rental. This could mean that rental correction will continue, for the next two quarters. Some companies also have plans of relocation. A total of 43% of the companies are planning a possible relocation, with 19% of this lot capitalising on the downturn by moving to more premium locations.

Another significant area which is expected to see changes is the Alternative Lease Structure. About 30% of the respondents will be optimising through lease structure alterations. The better terms in lease deeds such as reduced lock-in periods, security deposits, advance rentals etc are expected to bring structural shift in office space leasing, thereby making it more favourable for tenants. A change in tenant profile is also expected as more number of occupiers will look for location to Suburban Business Districts (SBD) and Peripheral Business Districts (PBD) micro markets either due to decreasing rentals or efficient office spaces.

News Published Under:   Delhi |

Comments