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india: Pan-India office gross leasing growth continues, 55 million sq ft as of Q3 end: Report

The office realty market has been on a robust growth trajectory as the gross leasing volume (GLV) across India’s key cities has reached 55 million sq ft as of September end and is expected to touch nearly 68 million sq ft, a historic high witnessed in 2019, said a Cushman & Wakefield India report.

During the quarter ended September, the gross leasing volume stood at 17.7 million sq ft, up 23% from a year ago, thereby maintaining healthy momentum witnessed in the last couple of quarters.

Mumbai, Delhi-NCR, and Bengaluru witnessed the largest transaction volumes during the quarter and collectively contributed around 64% of total GLV for the quarter. As of year to date (YTD) 2022, Mumbai’s GLV stands at 10.6 million sq ft, followed by Delhi-NCR at 10.2 million sq ft and Bengaluru at 13.1 million sq ft.

The upward leasing trajectory is a direct result of a very healthy demand and high confidence exhibited by occupiers. Owing to the demand surge, developers had the confidence to bring new supply into the market. The quarter witnessed the largest supply addition in recent history (of 10-11 quarters), with 15.5 million sq ft of cumulative supply addition across top-8 cities in India.

“2019 was a record year for the Indian CRE office sector and after considering the current gross leasing volume it is likely that the office sector will be close to the 2019 levels. There has been a supply addition of ~44 MSF, which is 15% higher than the entire supply of 2021 put together. The percentage of employees returning-to-office, the surge of demand and the performance of the Indian economy despite global headwinds will provide a lot of traction to the real estate sector in the quarters to come,” said Anshul Jain, MD, India & South East Asia, Cushman & Wakefield.

Despite the uncertainty surrounding the global economy driven by military conflict in Europe, supply chain disruptions and rising inflationary pressures, the Indian office market’s outlook remains optimistic.

While a certain degree of caution is warranted in the near term given the macroeconomic turmoil, fundamentals of the office market are sound. Positive hiring sentiment across sectors and ‘return to office’ trends are some of the key contributing factors to the healthy office space take-up at present, the report said.

The IT-BPM sector accounted for the largest share in gross leasing volumes of 4.8 million sq ft which is 28% during the quarter, followed by BFSI, Flex space, Engineering & Manufacturing sectors at 2.5 million sq ft each.

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