Privacy Rights

Net absorption in India's commercial real estate markets rebounds

The commercial real estate net absorption across India s top seven property markets broke the six-month declining trend by making a recovery in the quarter ended June, supported by demand for global capabilities centers across industries. While the occupiers remain slightly bearish on expansion, India continues to see growth from its domestic corporations and global occupiers moving ahead with their expansion plans. The gross leasing activity in the top seven cities of India rose to 12.7 million square feet during the quarter, demonstrating a stable market sentiment in contrast to the previous quarter, JLL India reported. The tech sector's share of leasing activity, at 23.1%, continued to lead in terms of overall share of the quarterly leasing activity, followed by flex 17.7%. The manufacturing sector has experienced positive impacts due to the favorable policies of the government and India's engineering talent, resulting in its share exceeding an eight-quarter high. The first two quarters of 2023 have seen the highest leasing activity in recent times, as compared to the same periods in the past four years. In contrast to predictions, the so-called headwinds effect was not as pronounced, and India has remained a significant player in the global office market. India boasts the world's leading GCC ecosystem, with approximately 27 - 30% of India's Grade A stock occupied by GCCs, he said. The growth in industries such as engineering research and development, advanced technologies, and cutting-edge banking, financial services, and insurance BFSI solutions and services is predicted to generate strong demand in India. Leasing activity was led by Bengaluru as the biggest market in terms of net absorption with a 23.5% share. Chennai also witnessed significant activity gains driven by major space taking-up by manufacturing, industrial and tech sectors to move to the second spot, with 22.2% share and its quarterly net absorption jumping to a 15-year high. Delhi-NCR lost 17.1% in the first quarter, losing from the top spot it had taken in the past two quarters. The focus on quality is a significant factor in driving consumer preferences towards core markets and superior-grade projects. As a result, we are observing higher occupancy levels Looking ahead, we anticipate stronger market activity in the second half of 2023, which will contribute to achieving a net absorption level of around 36 - 39 million sq ft for the full year, said Samantak Das, chief Economist and head of research and REIS India. Hyderabad dominated with a 47.2 percent share of new completions, followed by Bengaluru with a 22% share. The vacancy levels in office space across India experienced a marginal drop of 10 bps sequentially to 16.6, which is expected to remain sticky within the range of 16 - 17%. The future supply pipeline is strong and the leasing momentum is showing resilience, which bodes well for the office sector when market sentiment improves. Net absorption numbers are expected to remain strong and keep vacancies within a tight range, with moderate to strong pre-commitments in upcoming projects and expectations of leasing activity topping steam in the second half of 2023. India's office markets have shown remarkable resilience, maintaining a consistent level of quarterly lease activity throughout the first two quarters of 2023, led by technology and flex segment. Despite this, India's office markets have shown strength and are set to navigate the current landscape with resilience.

Read-to-Earn opportunity
Time to Read
You earned: None
Date

Post Profit

Post Profit
Earned for Pluses
...
Comment Rewards
...
Likes Own
...
Likes Commenter
...
Likes Author
...
Dislikes Author
...
Profit Subtotal, Twei ...

Post Loss

Post Loss
Spent for Minuses
...
Comment Tributes
...
Dislikes Own
...
Dislikes Commenter
...
Post Publish Tribute
...
PnL Reports
...
Loss Subtotal, Twei ...
Total Twei Earned: ...
Price for report instance: 1 Twei

Comment-to-Earn

11 Comments

Avatar of AZUuuuu

AZUuuuu

The high occupancy levels and anticipated stronger market activity in the second half of 2023 may be overly optimistic, given the uncertain economic environment.

Avatar of AZUK00

AZUK00

The bearishness of occupiers on expansion activity suggests a lack of confidence in the overall economic outlook.

Avatar of KittyKat

KittyKat

The growth in leasing activity in the first half of 2023 reflects the attractiveness of India's office market to both domestic and international companies.

Avatar of BuggaBoom

BuggaBoom

The high level of new completions in certain cities, such as Hyderabad, may lead to increased vacancy levels and downward pressure on rental prices.

Avatar of Noir Black

Noir Black

The resilience of India's office markets demonstrates the ability of the sector to adapt and navigate through challenging economic conditions.

Avatar of Muchacha

Muchacha

The positive effects of government policies on the manufacturing sector show the potential for growth and job creation in the industry.

Avatar of Mariposa

Mariposa

The reliance on the technology sector for leasing activity may be risky, as the sector can be volatile and subject to rapid changes in demand.

Avatar of Bella Ciao

Bella Ciao

The anticipation of stronger market activity in the second half of 2023 suggests continued growth and expansion in India's office sector.

Avatar of Comandante

Comandante

The growth from domestic corporations and global occupiers demonstrates confidence in India's economy and its potential for expansion.

Avatar of Muchacho

Muchacho

The resilience of India's office markets may be tested in the face of global headwinds and sluggishness in the tech sector.

Avatar of ZmeeLove

ZmeeLove

The recovery in commercial real estate net absorption indicates a positive shift in market conditions and a potential for sustained growth.

Available from LVL 13

Add your comment

Your comment avatar