November 20, 2023: Office market Bengaluru remained slow during the July-September period as office space gross leasing fell by 28% year-on-year (YoY) while new supply declined 25%, according to real estate consultant Vestian’s latest report.
Vestian has released its office market report for the third quarter of this calendar year, showing 21% growth in office leasing and 26% increase in new supply across top seven cities.
As per the data, the absorption of office space in the July-September period rose 21% YoY to 15.9 million square foot (msf) across seven major cities – Bengaluru, Hyderabad, Chennai, Mumbai, Pune, Delhi-NCR and Kolkata.
Across these seven cities, the new office space supply increased 26% annually to 13.4 msf during the third quarter of this calendar year.
Shrinivas Rao, CEO, Vestian, said, “In Q3 2023, the Indian office sector witnessed heightened real estate activities as absorption reached the highest level since pandemic and new completions increased to a five-quarter high.”
The sector also reported healthy vacancy levels with an appreciation in average rentals, Rao said. “This showcases the robust fundamentals of the sector and a healthy demand for quality office spaces in India,” Rao noted.
City-wise trend of gross leasing and new supply during July-September
- As per the report, Bengaluru- the largest office market with a huge presence of IT companies- witnessed a significant decline in leasing transactions and the new supply. In Bengaluru, the absorption of office space fell 28% YoY to 3.6 msf during the July-September quarter. The new supply also declined 25% YoY to 2.7 msf.
- The report mentioned that leasing of office space in Delhi-NCR also fell 14% YoY to 3 msf during July-September. New office space supply plunged 82% to 0.5 msf.
- During the July-September quarter, the leasing transactions of office space in Chennai rose 82% to 2 msf. The new supply was up 71% to 1.2 msf.
- In Hyderabad, the leasing of office space jumped 270% to 3.7 msf. The new supply soared 175% to 5.5 msf.
- Leasing of office space in Mumbai rose 21% to 2.3 msf as per the report. The new supply jumped 125% to 0.9 msf.
- Pune witnessed 83% increase in office leasing to 1.1 msf. The new supply rose 73% to 1.9 msf.
- The Kolkata office market saw 0.2 msf of leasing transactions and 0.7 msf of new supply.
| Demand-Supply Dynamics (Gross Leasing) | |||||||
| City | Absorption (Mn sq ft) Q3 2023 | Absorption (Mn sq ft) Q3 2022 | Y-o-Y Change (%) | Q-o-Q Change (%) | New Completions (Mn sq ft) Q3 2023 | Y-o-Y Change (%) | Q-o-Q Change (%) |
| Hyderabad | 3.7 | 1 | 270% | 61% | 5.5 | 175% | 34% |
| Bengaluru | 3.6 | 5 | -28% | -3% | 2.7 | -25% | -23% |
| NCR | 3 | 3.50 | -14% | 50% | 0.5 | -82% | NIL |
| Mumbai | 2.3 | 1.90 | 21% | 28% | 0.9 | 125% | 200% |
| Chennai | 2 | 1.10 | 82% | -9% | 1.2 | 71% | -43% |
| Pune | 1.1 | 0.60 | 83% | -39% | 1.9 | 73% | 138% |
| Kolkata | 0.2 | 0.01 | NA | 100% | 0.7 | NA | NA |
| Total | 15.9 | 13.11 | 21% | 14% | 13.4 | 26% | 19% |
On the demand-supply trend, Rao said, “The key office markets in Southern cities evolved and commanded the highest share of the pan-India absorption and new completions.”
“Rentals are expected to rise in these cities on the back of renewed demand as many large conglomerates are calling their employees back to the office,” he observed.
Office space occupiers’ profile
According to the Vestian report, the IT-ITeS sector dominated leasing during the July-September period with 25 % share. The BFSI sector accounted for 20 % of the total absorption in the third quarter of 2023.
Moreover, manufacturing & engineering and flexible space sectors accounted for 17% and 16% share, respectively, in Q3 2023.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at [email protected] |
Housing News Desk is the news desk of leading online real estate portal, Housing.com. Housing News Desk focuses on a variety of topics such as real estate laws, taxes, current news, property trends, home loans, rentals, décor, green homes, home improvement, etc. The main objective of the news desk, is to cover the real estate sector from the perspective of providing information that is useful to the end-user.
Facebook: https://www.facebook.com/housing.com/
Twitter: https://twitter.com/Housing
Email: [email protected]
Related Posts
Office market to stay strong despite falling growth numbers: Colliers report.
Southern cities account for 59% office leasing in Q2 2023: Report.
Home buyer satisfaction index at all-time low: Survey.
Gurugram only city to witness improvement in launches and sales in 2017: PropTiger report.
Sobha and Godrej emerge as top choices of HNI and NRI buyers: Track2Realty Report.
How to make your work from home more productive during times of Coronavirus.
