Gross Leasing Of Office Space Up 25% To Record 61.6 Million Square Feet In 2019
Gross leasing of office space increased by 25 percent to an all-time high of 61.6 million square feet across nine major cities during last year on better supply and demand conditions, according to property consultant CBRE.
Earlier, Knight Frank India reported 27 percent jump in office space leasing in 2019 at a record 60.6 million square feet gross across eight cities, while JLL India had said that net office space leasing rose by 40 percent last year across seven major cities to an all-time high of 46.5 million sq ft.
"The office sector remained buoyant in 2019, driven by demand from global multinationals, domestic firms and a healthy supply infusion in cities such as Hyderabad and Bangalore. By the end of 2019, gross leasing activity crossed 60 million to touch a historic high of 61.6 million sq ft, growing by more than 25 percent year-on-year," CBRE said in a report released Monday.
Bengaluru, followed by Hyderabad, National Capital Region, and Mumbai dominated office leasing on an annual basis, together accounting for almost 75 percent of the overall leasing of office space. Absorption of space increased across all cities except Kochi, it added.
Chairman & Chief Executive Officer (India, South East Asia, Middle East & Africa), CBRE Anshuman Magazine said, "in 2019, policy reforms across various sectors acted as a business sentiment booster, leading to tremendous improvement in India's Ease of Doing Business Ranking. According to the World Bank, India ranks 63rd among 190 countries on the Ease of Doing Business index".
In the coming years, the real estate sector is expected to offer vast development and investment opportunities as the Indian economy transitions and its workforce expands, he added. According to the data, the share of the technology sector in overall space take-up rose from about a third in 2018 to almost 40 percent, with overall leasing by such firms rising by more than 45 percent on an annual basis.
The share of research, consulting and analytics firms has increased to 5 percent in 2019 from 4 percent in 2018. The collective share of sectors such as engineering and manufacturing, BFSI, e-commerce, and research, consulting & analytics, dropped from 36 percent in 2018 to 31 percent in 2019.
Meanwhile, corporates continued to opt for flexible spaces, with the share of the segment rising from 12 percent in 2018 to about 14 percent last year. In 2019, supply addition rose by about 50 percent year-on-year to touch 52.4 million sq ft.
"The growth in supply additions in 2019 as a result of buildings receiving much-awaited occupation certificates across cities, as well as pre-commitments made in the prior years which came to fruition through 2019. The supply is likely to normalise in 2020, resulting in absorption growth in the coming year to plateau and be in line with the supply," said Ram Chandnani, managing director (Advisory & Transaction Services), India, CBRE South Asia.