The office property market is expected to continue to strengthen for the remainder of 2014. The restoration of business confidence is expected to gain steam, on the back of the positive business outlook. Adequate supply in the pipeline in all the markets will ensure steady rentals across the cities in the medium term, while vacancy may fall marginally in cities like Bangalore and Pune.

This market witnessed a new wave of leasing activity in Bangalore and Pune, while cities like Mumbai, Chennai recorded a moderate increase in absorption QoQ. Approximately 8 million sq. ft. of office space was leased across eight major cities in India during the quarter. The IT / ITeS sectors remained primary demand driver says Colliers International report.

The Collier International has come out with its report on economic overview which says that overall; market sentiment witnessed an improvement this quarter after the general elections. As Prime Minister Narendra Modi took charge at the Centre with a clear mandate, investor confidence picked up in expectation that the new government would revitalise the economy. Consequently, the CII Business Confidence Index for 2Q 2014 increased to 53.7 from 49.9 in the previous quarter. The capital markets also performed well, with both the BSE Sensex and the BSE Realty Index showing an upward swing. The rupee strengthened and even showed signs of recovery during the quarter, hovering in the range of 60 to 60.5 per US dollar. The first quarter GDP growth figures posted a marginal decrease from 4.7% in 4Q 2013 to 4.6% in 1Q 2014. The office property market witnessed a new wave of leasing activity in Bangalore and Pune, while cities like Mumbai, Chennai recorded a moderate increase in absorption QoQ. Approximately 8 million sq. ft. of office space was leased across eight major cities in India during the quarter.

Real estate players are now resorting to the issue of non-convertible debentures (NCD) to raise the capital.

Recently, Intime Properties, a part of the K Raheja Corp group raised Rs 340 crore through the issue of non-convertible debentures with a fixed rate of 9.95 per cent.

According to a statement issued by the real estate firm, the security is a commercial mortgage-backed security (CMBS). The issue was being used to refinance bank debt. It has been rated AAA by India Ratings, according to a statement by the firm.

“INTIME owns and operates 3 commercial office buildings in Mindspace IT Park, Hyderabad, with a total leasable area of 1.71 mn sq f. The property is currently 99% occupied by over 35 clients,” it said.

It may be noted that Real estate major DLF had previously come out with a CMBS issue in May. The NCDs are set to mature in nine years, with options to redeem in the fourth and the sixth year, respectively.

The Raheja group holds 89 per cent stake in Intime, with the remainder held by the Andhra Pradesh Industrial Infrastructure Corporation Ltd, according to the company statement. IDFC Ltd and Credit Suisse Securities (India) Private Limited were the arrangers of the issue.