Bangalore, Oct 7 (IANS) Property market in the Karnataka capital witnessed a mixed trend during the first half of 2013, with demand for office space declining 37 percent year-on-year (YoY), while it increased 33 percent in housing space, a report by global property consultant Knight Frank said Monday.
"The city's office market could absorb around 3.98 million square feet during first half (H1 of 2013), a 37 percent decline over H1 of 2012 due to delay in decision-making in subdued economic conditions," said the report.
Though first quarter (January-March) saw steep decline in demand, the second quarter (April-June) saw demand picking up sequentially.
"With signs of global economic recovery and green shoots of growth in domestic economy, the outlook is better for office space during second half (July-December) of this year," Knight Frank India managing director Shishir Baijal told reporters here.
The city's flagship services sector, comprising IT/ITeS (IT-enabled services) continued to dominate the office market, accounting for a whopping 61 percent occupation, followed by manufacturing way behind at 10 percent and banking four percent.
"Adequate infrastructure development across the city will fuel interest in absorbing office space in the near future," Baijal noted.
Whitefield in the eastern suburbs and the area around the outer ring road emerged as preferred locations for office space due to enough supply and competitive rentals.
"Demand for office space in suburban markets declined sharply to 13 percent from 35 percent last year. Though property prices have been stable over the past few years, lack of support infrastructure has diminished investment potential in the city," Baijal said.
In contrast, the city's residential market witnessed 33 percent jump in demand over the same period (H1) in 2012.
"About 28,000 residential units were launched during first half, enabling the city score a gain of 22 percent in terms of absorption as against 32 percent decline in Mumbai market," said company's research and advisory services director Samantak Das.
The company's research indicated that mid-end homes were most popular in the prevailing economic environment while demand for residential properties above Rs.5 million remained sluggish.
"As supply is higher than demand, prices remained stable owing to abundant choice of competitively priced products," Das said.
As is its wont, IT/ITeS sector continues to be the key demand driver of the city's residential market, with the upscale southern suburb witnessing the highest number of new launches in first half.
"Demand is likely to be more in areas along the outer ring road, thanks to connectivity and favourable pricing," Das said.
According to the report, while demand remained subdued for commercial space, residential market has shown strong traction, with areas around the ring road, northern, eastern and southern suburbs being preferred localities.