Normally the property consultants offer reports on everything and anything that happens in the real estate sector. In most cases their studies seldom differ. However their reports about office space demand trends in January 2013 are not supportive each other. On the other end, these reports seem contrasting each other.

The report of CBRE, C&W, DTZ and JLL are offering varying and contrasting facts. This contrast has created a number of issues for those who analyze the market so closely. The market watchers do not find it easier to reach out a conclusion from these contrasting reports.

Let us begin with the report of CB Richard Ellis. The American property consultant reported that the office space absorption has risen by 37%. It added that the absorption, compared to January 2012, is more this year.

Cushman & Wakefield came with another report. As per their report the office space absorption is done by 37%. This report is upside down of what was stated by CBRE.

The confusion stops nowhere here. But it is only the beginning point.

DTZ India was the next to present its report. It reported that the office space demand is up this year. However in their opinion the rise is only by 20%.

It means that this report too does not comply with the CBRE report. At the same time it does not contradict the report of the former.

Meanwhile Jones Lang Lasalle presented still interesting report. As per the JLL report the demand for office space is static and modest. The report states that the demand is neither growing nor falling but static and steady in comparison to the absorption rates in January 2012.

To summarize, there is no conformity among the property consultants with regard to  the office space absorption trends. While two of the property consultants report to have an increase in the office space demand, one reports a downfall. Still another report states that the office space demand is static and stable.

The latest report by property advisor DTZ comparing the trends in the first quarter of 2012 to the same period last year shows a noticeable change in the profile of the commercial real estate occupier in Mumbai. Between January and March 2012, Indian corporate firms account for 29 per cent of occupiers of new commercial realty space in the city. This is a sharp fall from the 71 per cent market share of new space that these corporates picked up in the corresponding period in 2011.

In comparison, US- and Europe-based corporates were responsible for taking up 5 and 18 per cent of the space in the first quarter of 2011 respectively. In the same period this year, their market share has gone up by 32 and 23 per cent respectively.

According to Rohit Kumar, DTZ research head, an analysis of quarter-on-quarter and year-on-year office space take-up highlights the fact that relative market share of MNCs based out of USA and Europe has increased significantly while that of their Indian counterparts has dropped. “Be it IT, ITES or Banking, Financial Services and Insurance (BSFI), the MNCs find India relatively cheaper in terms of labour and real estate. On the other hand, despite the positive growth signals from the US and Europe, Indian corporates are more conservative, fearing the return of recession,” said Kumar.

Cement and steel manufacturers have already hinted at a price hike after the Budget proposed raising the excise duty to 12 per cent.

Realty players said that purchase or construction of a house would now cost more due to expected rise in prices of key raw materials cement and steel and a hike in service tax by 2 per cent.Barring low-cost housing, property prices are expected to rise in the coming days after the proposed hike in service tax from 10 per cent to 12 per cent.

Jones Lang LaSalle India Chairman and Country Head Anuj Puri said that “the increase in the service tax rate from 10 per cent to 12 per cent will increase the cost of production for developers, who are already reeling under high input costs. It follows that this increased burden will be passed on to end users”.

Commenting on the budget proposals, Confederation of Real Estate Developers’ Association of India (CREDAI) Chairman Pradeep Jain said, “Application of TDS on the purchase and sale of property and increasing Service Tax by 2 per cent will further add on to the overall cost of property and are bound to make property more costly in coming days.”

DTZ, a Realty consultant said that increase in the service tax is going to further increase marginally the overall burden on the home buyers of mid and high segment (dwellings costing more than 25 lakh). The impact of service tax would be about Rs 40,000 on a Rs 75 lakh home.

However, DTZ said that affordable housing, being part of negative list, is exempted from service tax and the move would give a boost to the affordable housing segment.