India’s office space market saw 36% year-on-year (YoY) growth in transaction volumes during 2022, shows a new report by property brokerage company Knight Frank India.
According to the report, the market also saw yearly growth of 28% in completions. The 51.6 million square foot (msf) transacted during the year is second only to the 60.6 msf recorded in 2019 in terms of annual transacted volumes, it says. In terms of half yearly volumes, the 26.3 msf transacted in H2 2022 is second only to the 33.2 msf transacted in H2 2019.
“The Indian office market was not as impaired by the remote working phenomenon as the rest of the world due to the greater influence that employers have here and their willingness to adopt flexible co-working options to address current concerns,” the report titled India Real Estate: Residential & Office, July-December 2022 said.
The strong resurgence in office demand despite the significant macroeconomic challenges seen this year is a testament to the strength of the Indian office space market, says the report.
“While market traction has been strong over the major part of 2022, some deceleration in transaction volumes was observed in Q4 2022 in key markets such as Bengaluru, Mumbai and Chennai with a few large transactions getting delayed. Notably, transaction volumes in Bengaluru slipped by a substantial 64% in Q4 2022 compared to the preceding quarter,” it adds.
The Other Services sector, which include e-commerce, education, healthcare and logistics companies among others, took up the most office space at 30% (7.9 msf) of the total space transacted during the period. The IT sector was the second-most prolific sector during H2 2022, accounting for 22% of the area transacted during the period.
Office completions also staged a recovery in line with transactions, growing to 25.3 msf, which is the highest since the onset of the pandemic and second only to the 37.5 msf reached in H2 2019.
Rental values show consistent growth; Bangalore tops chart
Rental levels were stable or grew across all markets in H2 2022, marking it as the second half-yearly period since H1 2019 that this has occurred. Bangalore and Pune office markets grew the most during H2 2022 at 11% and 7% YoY, respectively.
With the pandemic having little material impact on businesses, the evolving story of global economic growth could have a greater bearing on market traction going forward, says the report.
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