Office space absorption dipped by 23 per cent during 2012 in major cities to 29 million sq ft as corporates remained cautious of expanding businesses amid global uncertainties and slowdown in the Indian economy, property consultant Cushman and Wakefield has said.
The total net absorption for 2012 was recorded at 29.05 million sq ft in the 8 major cities -- NCR, Mumbai, Bengalur , Chennai, Hyderabad, Pune, Kolkata and Ahmedabad as against 37.73 million sq ft in the previous year, the report said.
The supply of office space also dropped by 10 per cent at 35.30 million sq ft as against 39.35 million sq ft in 2011.
"The cautious approach by global and Indian companies, in view of a slower economic growth led to a decline in absorption levels," the consultant said, adding that majority of the companies put on hold their expansion plans.
Chennai saw the highest decline -- down 51 per cent over last year. Bengaluru, a traditionally high absorption market recorded a decline of 24 per cent over last year.
"Almost all locations which are driven by the IT/ ITeS and related industries recorded a slowdown in absorption," C&W said. Bengaluru noted the highest net absorption of 7.29 million sq ft, followed by Mumbai that saw 6.26 million sq ft of net absorption for the year.
Leasing activity (net absorption) declined in all cities except Ahmedabad and Mumbai that saw a notable increase of 38 per cent and 9 per cent, respectively, over the last year.
NCR witnessed absorption of about 4.76 million sq ft, a drop of about 12 per cent from 2011.
"Factors like global uncertainties, slowdown in India GDP, raging consumer inflation and low industrial output, have negatively affected the economic sentiments of corporations operating in India leading to an overall slowdown in absorption," Cushman & Wakefield South Asia Executive Managing Director Sanjay Dutt said.