October 13, 2023: Office supply completions across the top seven cities in India are expected to exceed 165 million square foot (msf) between 2023-2025, which is significantly higher than 142 msf recorded during 2020-2022, according to a report by real estate consulting firm CBRE South Asia.
The report titled Office Myths Debunked, mentioned that the robust growth reflects the positive outlook of the developers. Bangalore and Hyderabad will continue to dominate this upcoming office space supply, accounting for nearly half the overall supply between 2023-2025, it said.
The report said that, during the 2023-2025 period, Bangalore will lead the office space supply, accounting for 29% of the total supply in India, followed by Hyderabad at 20%, Delhi-NCR at 17%, Pune at 12%, Chennai at 11%, Mumbai at 9% and Kolkata at 2%.
According to the report, new office development completions in Bangalore will be concentrated in the Outer Ring Road, North Business District area, while in Hyderabad IT Corridor II, Extended IT Corridor will see most of the new completions. In Delhi-NCR, new office space completions will be dominated by the Expressway, Golf Course Road extension while Pune will see most completions in Peripheral Business District NE, South Business District NW. Upcoming new office supply in Chennai will be mainly witnessed in OMR Zone 2, MP Road while in Mumbai, it will be in the Navi Mumbai Business District, EX Business District and Kolkata, new office supply will be primarily in the Peripheral Business District, South Business District.
Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said, “The office sector in India is witnessing good growth momentum. The substantial supply completions across top cities in India is projected to exceed 165 million sqft (msf) over 2023-2025, indicating a positive outlook for the office sector. The average annual office supply increased by a robust 17%, and the average building size increased by a significant 18% over the three-year period from 2020 to 2022. This growth is expected to further accelerate by 15-18% during the next three-year period from 2023 to 2025, supported by strengthening occupier demand and developers’ expansion plans. Moreover, with sustained technology spending from corporates, India will remain the ‘office of the world’. The country’s cost and scale advantages would drive global corporates to set up more Global Capability Centres (GCCs) across various sectors.”
Ram Chandnani, managing director, Advisory & Transactions Services, CBRE India, said, “India continues to be a top investment destination in the Asia Pacific for North American & European investors, as they seek long-term diversification and healthy rental returns. Investment in India by foreign investors increased by a strong 80% year-on-year to touch $2.8 billion in 2022, making it the only market in the entire APAC region to witness annual growth in capital deployment.”
The report said that despite prevailing economic conditions, IT expenditure in India is expected to remain robust in 2023. This resilience is attributed to corporations’ continued focus on enhancing employee productivity, improving customer experiences and optimising operations. The demand for office space was primarily driven by BFSI, technology and pharmaceutical companies, accounting for around 50% share in Jan-Sep 2023, with expectations of sustained leasing activity in the long term.
Further, the report highlighted a positive trend in hiring in India, with a significant upswing in 2022, witnessing a moderate increase in total jobs compared to the previous year. It projects continued growth in the annual employment rate for office-going professionals in the six major cities, forecasting an 11% increase in 2023. This reflects a promising outlook for the country’s job market and employment opportunities, reflecting increased economic activity and demand for talent.
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