December 15, 2010 / 2:44 PM / 9 years ago

India to add 50 mln sq ft office space by mid-2012 - CBRE

Pigeons fly as clouds gather over New Delhi's REUTERS/Buddhika Weerasinghe/Files

MUMBAI (Reuters) - India’s office space is likely to grow by 50 million square feet (sq ft) over the next 18 months, driven by strong economic growth and a sustained recovery by the information technology industry, property services firm CB Richard Ellis (CBRE) said.

The Indian office space market added 55 million sq ft in 2010, and demand will continue, it said in an annual review of the Indian market on Wednesday.

While office rentals are expected to rise, the gains will be limited because of the new supply and existing vacant space of about 60 million sq ft, CBRE’s south Asia Managing Director Anshuman Magazine told reporters.

The country’s top seven cities had total office space of 280 million sq ft, nearly equal to the combined office space in other major Asian cities of Shanghai, Singapore, Hong Kong and Seoul, Magazine said.

A quarter of the new office space will come up in Mumbai, which CBRE rates as the world’s fourth most expensive office market.

CBRE’s report was less optimistic on the outlook for India’s residential market, with transaction volumes expected to fall due to high prices, large supply pipeline and rising mortgage rates.

Property prices in major Indian cities like Mumbai and Delhi have more than doubled over the past 18 months, spurred by rising incomes and a stock market rally, but volumes are already down a third this year.

India’s central bank has raised interest rates six times so far this year, in an effort to bring down stubbornly high inflation.

Reporting by Prashant Mehra; Editing by Aradhana Aravindan

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