India Office Leasing Slips 73%
The Covid19 crisis and the national lockdown across all major cities have impacted the commercial real estate gross leasing activity adversely in the quarter ended June. Net absorption of commercial real estate across top 8 cities declined over 73% from a year ago and 49.5% on-quarter to 3.72 mil
Published -
Jul 11, 2020 6:51 AM
The Covid19 crisis and the national lockdown across all major cities have impacted the commercial real estate gross leasing activity adversely in the quarter ended June. Net absorption of commercial real estate across top 8 cities declined over 73% from a year ago and 49.5% on-quarter to 3.72 million sq ft during the quarter as fresh transaction activity remained muted, showed data from Cushman & Wakefield. Hyderabad, Mumbai and Chennai have contributed significantly towards net absorption with share of 47%, 44% and 14% respectively, mainly due to projects with significant pre-commitments becoming operational during the quarter which resulted in improved overall net absorption. Cities like Delhi-NCR and Bengaluru have seen negative absorption pushing the overall net absorption downwards. In an ever-evolving situation, it may be difficult to predict the timeline within which Indian commercial real estate might be able to restore its pre-Covid growth momentum. But, a certain level of normalcy could be expected in the second half as companies gradually resume their operations. In terms of leasing activity, the information technology- business process management (IT-BPM) sector continued to witness maximum share with 43% share in overall leasing. Healthcare & pharmaceuticals accounted for 18.6% share followed by Captive centres (GCCs) with a 10.1% share. Pre-commitment activity was 3.41 million sq ft compared to 2.25 million sq ft in the previous quarter, on the back of improved pre-leasing activity in Bengaluru and Hyderabad. This points towards healthy medium-term forecasts for the sector’s recovery as occupiers commit to space take-up based on future growth plans. The completion activity also remained slow during the second quarter, resulting in 7.54 million sq ft supply being added, down 23.8% on quarter.
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