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New Delhi: India’s office market net absorption in the top seven cities ie Mumbai, Delhi-NCR, Bangalore, Hyderabad, Chennai, KolkataAnd Pune 38.25 million sq ft was recorded in 2022, reaching a three-year high. JLL India,
The net absorption for the calendar year 2022 has also surpassed the five-year pre-pandemic average (2015-2019) of 3.1% and is second only to the 2019 net absorption numbers for the last 10 years, showing strong resilience displays the Indian office market.
With a 23.7% share, Bengaluru retained its leadership position for highest net absorption for calendar year 2022, with Hyderabad coming second. As a result, pan-India net absorption was higher by 46.1% on a year-on-year basis.
“The office market in India has made a strong recovery in 2022, making it the strongest post-COVID year in terms of office market performance and second only to 2019 in the last decade. Even the evolving hybrid working Along with the ecosystem, we have witnessed a rapid increase in office occupancy levels. This has resulted in a strong demand for occupiers to adopt their real estate strategies with greater clarity and agility,” said Rahul Arora, Head (Office Leasing Advisory India) and Managing Director (Karnataka and Kerala), JLL India.
On a quarter-on-quarter (QoQ) basis, net absorption declined 19% to 7.99 million sq ft, as early signs of slowdown driven by global headwinds saw delay in decision making and a cautious approach by occupiers led to deals affected the closure. last quarter of the year.
In Q4 2022, Delhi NCR led with a 23.7% share of net absorption, with Hyderabad and Chennai showing strong momentum towards the end of the year, overtaking even Mumbai and Bengaluru during the quarter. Top three cities to account for 60.9% of net absorption in Q4 2022, driven by strong supply growth with previous pre-commitments.
“Space requirements have shown a slight softening with active requirements falling by around 15% as many real estate schemes have gone on hold or have been put on hold indefinitely in view of the macroeconomic headwinds. Decision making is likely as businesses look at macroeconomic signals before committing capital for new offices. Office demand is expected to remain similar to 2022, with modest to modest growth,” said Dr. Samantak Das, Chief Economist and said Head of Research and REIS, India, JLL.
Gross leasing activity for calendar year 2022 at 49.41 million sq ft grew 47.4% year-on-year and reached a three-year high. Delhi NCR and Bengaluru are the two largest office markets in terms of gross leasing activity for the full year 2022, followed by Mumbai. These three markets account for more than two-thirds of the occupier activity for the 2022 calendar year.
Mumbai, Bengaluru and Delhi-NCR accounted for 23.5%, 19.6% and 18.8% of the gross leasing activity during the Q4 2022 quarter.
Flex demand continues to be on an upward trend with the footprint growth of flex operators, a fitting marker of the growing role of flex in real estate portfolio strategies. Calendar year 2022 flex seat take-up has reached an all-time high of 131,700+ seats. In Q4 2022, flex seat leasing recorded its strongest quarter ever as managed or enterprise solutions by enterprises took ~38,140 seats.
For the full year 2022, new completions reached a new all-time high for the Indian office markets at 58.27 million sq ft. Over the next 12 months, approximately 53-58 million sq ft is lined up with average pre-commitment levels of -17%. According to JLL, for properties owned by institutional landlords, which account for 30% of the supply pipeline, the pre-commitment rate is 22-25%.
Supply in Q4 2022 stood at 14.83 million sq ft; 23.8% Q-o-Q. Completion in Q4 2022 was headlined by Hyderabad and Bengaluru, which combined to account for 60.5% of the quarterly supply growth. Around 23% of the new supply inflow was pre-committed, indicating that there has been a slight slowdown in occupier decision-making in the last 3-4 months. A significant portion of this came from new completions in Chennai, where 55% of the supply was pre-committed and Mumbai had a 28% pre-commitment rate. And Hyderabad and Bengaluru saw a pre-commitment rate of 21% respectively, while Delhi-NCR had only 13% pre-commitment level.
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