Indian Office Space Market Charts Robust Recovery

Realty Leaders share their perspective on Knight Frank India latest report citing strong quarterly growth in India’s office transactions in Q3 of 2021. The total office space absorbed across major cities was at 1.2 mn sq m (12.5 million sq. ft) in the third quarter, representing 168% year-on-year growth. Among the larger markets, Chennai, Bengaluru, and National Capital Region (NCR) recorded highest recovery in Q3 2021 with transactions reaching the level of 123%, 112% and 93% respectively of the quarterly average of the year 2019. “The third quarter of 2021 saw the Indian office space market chart a robust recovery after the second wave threatened to derail the market in the preceding quarter. The volumes achieved in this quarter are also statistically significant when benchmarked against quarterly average of 2019, as office transactions were at a historic high in that year.” said Shishir Baijal, Chairman and Managing Director, Knight Frank India Ram Raheja - Director, S Raheja Realty shared, “Residential real estate has experienced a silver lining since the advent of the pandemic-induced lockdown. Mumbai, especially, has witnessed an unreal upsurge in housing sales and a consistent increase. With incentives like lower home loan rates, stamp duty rebates, and other government measures, it was a lucrative time for taking the plunge. Owning and upgrading their homes became a priority for most. It is therefore no surprise that the island city has witnessed a phenomenal growth of 109% YOY with sale of 15,942 residential units in Q32021. Even new launches have grown 45% since last year, showcasing a bullish sentiment among developers. The fact that this growth is seen even without stimuli like stamp-duty cut indicates that the upswing in demand is here to stay. In terms of categories, the premium category, i.e. 10 million and above, has seen consistent growth in Q32021, while prices too have remained stable. This is indicative that the luxury residential segment will continue to propel. The robust sales in real estate are likely to continue with further optimism driven by the upcoming festive season, new launches, and the expected economic revival along with improved status of completely vaccinated population.” Rohit Poddar, Managing Director, Poddar Housing and Development Ltd added, “With the robust recovery of the real estate and construction segment, job market revival, and the sizeable vaccination, sales of both residential and commercial properties are showing strong signs of revival. The share of home sales in the under INR 5 mn ticket size category standing at 43% in Q3 2021 reflects the high demand for affordable housing in and around metros. The upcoming festive season will boost this trend as the end-consumers and investors alike will look towards making the purchase, ultimately reflecting further growth. Looking at the commercial segment, the sector is starting to boom as things start easing out and the same is evidently visible. The 6% growth of the commercial real estate segment signifies the strengthening of businesses despite the second wave. As restrictions ease-out further, the demand for commercial property is surely expected to overpower pre-pandemic levels." Rajani Sinha, Chief Economist & National Director – Research, Knight Frank India concluded, “The office market has shown a smart bounce back in the third quarter. Going forward, with the economy moving towards normalcy and corporates making plans to get back to Work from Office, the outlook for the segment is likely to improve further. Healthy performance of the IT sector in the last few quarters and strong hiring in the tech sector also bodes well for the office segment.”