The office market in India witnessed a net absorption of 5.4 million sq. ft. in the quarter ended September, an increase of 64% compared with the quarter ended June, according to estimates by JLL.
The rebound in growth was led by Bengaluru and Hyderabad, which together accounted for almost 80% of the net absorption. There was, however, a contraction in major markets of Delhi NCR, Mumbai and Pune. From a very low base, the Chennai market grew 110%.
“The heightened activity in Bengaluru indicates a gradual resurgence in taking up of spaces coupled with the translation of pent-up demand from the previous quarter of this year,” JLL said.
“While we continue to see the impact of the pandemic on various businesses, there is a significant surge in activity across most office markets under consideration. This is seen in gross leasing which more than doubled from the previous quarter at 13.8 million sq ft,” said Ramesh Nair, CEO and country head, India, JLL.
“At the same time, it is important to note that large and mid-sized occupiers across major markets continue to review real estate portfolios in a bid to optimise cost, laying higher emphasis on sustainability and employee well-being as well as adoption of flexible working practices,” he said.
While the share of IT/ITeS occupiers in gross leasing dipped to 43% in the September quarter from 61% in the previous quarter, e-commerce and manufacturing sectors gained significant shares during the September quarter forming 16% (negligible in June quarter) and 17% (5% in June quarter) respectively, owing to surging demand of e-commerce during COVID-19.
JLL said new completions increased by 59% quarter-on-quarter with 9.2 million sq ft of new stock coming to market.
“With lockdown restrictions being relaxed in the third quarter in most of the markets under review, office projects in the final stages of construction or pending receipt of occupancy certificates came onboard. This resulted in an increase in the supply of office space, even surpassing 8.6 million sq ft witnessed in Q1 2020,” said Samantak Das, Chief Economist and Head of Research & REIS, India, JLL.
In sync with net absorption, Bengaluru and Hyderabad led the increase in new completions accounting for 87% of the total new completions in the September quarter, he said.
In term of office rents while Bengaluru witnessed a marginal increase, it was stable in rest of India, it said.
