India Office Market Beat
According to the Cushman & Wakefield India Office Report for Q1 (Jan-March 2020), while projects with pre-commitments and operational dates of 2020 are likely to slip past their committed deadlines to the latter part of the year, supply deferments are likely as the impact on the raw material supply chains and time needed for remobilization of labor is expected to cascade into completion slippages. Construction activity is expected to slowly resume upon lifting of the lockdown. The net absorption in Q1 2020 stands at 7.40 msf, which is lower by 22.6% on a quarterly basis and 36.5% lower on a yearly basis as transaction slippages impacted the leasing momentum towards the end of the quarter. Like new completions, Bengaluru leads the way in net absorption with share of 35.5%, followed by Delhi NCR, Hyderabad and Mumbai with shares of 21.6%, 12.1% and 11.6% respectively. How Indian Cities Performed Delhi NCR, Bengaluru and Mumbai were the most active markets with 25.0%, 22.3% and 18.5% shares in gross leasing volumes in this quarter. However, apart from Pune, Bengaluru and Ahmedabad all other cities saw their leasing volumes drop on a q-o-q basis. Overall there has been a 30% growth y-o-y in gross leasing. Bengaluru showed least impact of covid-19. There was a 16.75 msf gross leasing volume in Q1 2020, a 30% higher y-o-y. However, the net absorption in Q1 2020 stands at 7.40 msf, which is lower by 22.6% on a quarterly basis. In terms of leasing activity, the IT-BPM sector continued to witness maximum share with 32.0% share in overall leasing. Captive centres (GCCs) accounted for a 15.8% share followed by flex workspaces with a 13.5% share. In times of cost savings around capex spends while ensuring a flexible work environment for employees, managed service operators are likely to be in demand going forward. Pre-commitment activity was just 2.36 msf compared to 10.37 msf in the previous quarter, indicative of a general uncertainty in business cycles impacting future growth decisions by CREs. Pune led with a 38% share, followed by Hyderabad with 28% share, Delhi NCR with 16% share and Bengaluru with 10% share. Intense completion activity before the lockdown resulted in 10.8 mn sf of supply being added in the quarter, which was a 10.2% q-o-q rise. However, on a yearly basis, new completions were down by 32.3%. Bengaluru led the way with a 41.7% share of new supply, followed by Mumbai and Delhi NCR with 20.7% and 20.0% share respectively. CUSHMAN & WAKEFIELD INDIA OFFICE REPORT Q1 (JAN-MARCH 2020) STATES GROSS LEASING AS HEALTHY AT 16.75 MSF (30% HIGHER Y-O-Y), WHILE IT WAS LOWER BY 30% ON A Q-O-Q BASIS COMPARISON FOR THE TOP EIGHT CITIES. MANY TRANSACTIONS IN ADVANCED STAGES WERE PUSHED TO THE BACkBURNER OR ON HOLD AS CORPORATES FOCUSED ON BUSINESS CONTINUITY PLANNING MEASURES.
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