Office space leasing across India’s major cities likely to grow 22% in 2021
Office space absorption across India’s major cities is expected to touch a growth of 22% in 2021, an increase from last year despite the disruption caused by the pandemic in the last few quarters.
Office space absorption across India’s six major cities is expected to touch 41.3 million sq ft in 2021 marking a growth of 22% from last year despite the disruption caused by the pandemic in the last few quarters, said international property consultant Savills India.
Of the major cities, the country’s financial capital Mumbai is likely to post the highest on-year growth in leasing activity at 5.5 million sq ft in 2021 against 2.9 million sq ft absorption clocked in 2020.
In line with the trend witnessed in 2020, Bangalore is likely to take the lead, with an estimated absorption of 14 million sq ft by year-end as confidence among corporate occupiers in the city continue to remain strong. Additionally, the availability of a diverse talent pool and robust tech ecosystem puts the city ahead of other others.
“We expect the office real estate market to improve in 2021 as it continues to attract interest from occupiers as well as investors despite the disruptions caused in 2020. Boosted by positive government reforms and improvement in economic activity, we are certain that office space absorption will pick up soon. Several corporate occupiers have revived their expansion plans as more and more people start returning to offices,” said Anurag Mathur, CEO, Savills India.
Bangalore is likely to witness a 20-30% increase in absorption along with similar growth in incremental supply. Large-sized deals above 1 lakh sq ft area are expected to form a major portion of this projected leasing.
Mumbai is likely to see an increase of about 85-90% in office leasing as recovery is anticipated in the latter part of 2021. BFSI and technology occupiers are likely to drive the office demand. Savills India expects rentals to be largely stable across most micro-markets.
“Though 2020 brought a pause to the growth momentum in office absorption, markets have steadily improved in the recent months. The pandemic-induced slowdown has created some clear distinction between cities. The decline was less severe in tech-driven cities, while those markets that are historically more diverse in terms of their demand base, the impact was much sharper. But the important thing is that most markets survived without a crash in prices or unmanageable vacancy levels. This is likely to bode well for investor confidence,” Arvind Nandan, Managing Director, Research and Consulting, Savills India.
Source: ETRealty ( http://bit.ly/3bIm9z3 )