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Leasing activity in India’s office sector witnessed robust growth in the first quarter of calendar year 2022. The activity grew 97% year-on-year (YoY) to 11.4 million sq.ft, according to a latest report by CBRE.
Two cities in Southern India namely Bengaluru and Chennai as well as Delhi-NCR accounted for two-third of the transaction activity in the quarter, highlighted CBRE. Supply fell by around 11% YoY to touch nearly 9.4 million sq. ft. during Q1 2022.
Bengaluru, Hyderabad and Chennai drove development completions during the review period, with a cumulative share of 70%.
On a quarterly basis, demand came from technology firms for leasing space with a share of 34% followed by BFSI firms (17%), flexible space operators (13%), engineering and manufacturing (12%), research, consulting and analytics (11%).
The report further said that office space absorption was driven by small (less than 10,000 sq. ft) to medium-sized (10,000-50,000 sq. ft.) transactions with a share of around 84%. Pune and Chennai, followed by Delhi-NCR and Bengaluru, dominated large-sized deal closures.
Outlook for 2022
CBRE expects leasing momentum to remain strong in 2022. An increase in long-term decision-making by occupiers would lead to more employees returning to office, thereby accelerating development completion.
The commercial real estate services and investment firm in its latest report said that it expects average deal size to increase in 2022. The average deal size rose to 40,000 sq. ft in 2-21 from 26,700 sq.ft. in 2017.
CBRE anticipates supply would be dominated by Bengaluru, Hyderabad and Delhi-NCR, which would drive close to 70% of completion in 2022.
More than 75% of the completions in the future will be in non-SEZ spaces. The supply in non-SEZ spaces would be dominated by Bengaluru, followed by Delhi-NCR and Hyderabad. SEZ supply would be mostly led by Hyderabad and Delhi-NCR.