Office market booming despite economic woes

Mumbai: Despite trouble brewing in the domestic economy country's top office markets, including Mumbai, NCR, Hyderabad, Bangalore, Chennai and Pune grew at 22 per cent in 2019 over 2018, amounting to a gross absorption of 57.72 million square feet.

At 46 per cent, IT & ITeS sector created the highest demand for Grade A office spaces pan-India, followed by 14 per cent from co-working and 10.6 per cent from banking and financial services, said the year-end 2019 report by Savills India, a UK-based international property consultant.

Three top office markets of India touched, or were very close to, 10 mn sq. feet mark: Bangalore, NCR & Hyderabad.

There was no effect of India slowdown on office market as global companies preferred India for setting up their development centres as their margins are under pressure while India is able to provide resources, talent pool and scalable office space at reasonable cost.

“The high growth in India’s office market was largely due to India’s increasing capabilities in the technology sector, rise in flexible spaces, formalisation of the Indian economy and the growing offshoring by Western corporations. Despite headwinds in the domestic economy, we expect this growth to trend in 2020 as well,” said Anurag Mathur, CEO, Savills India.

Hyderabad recorded the highest year-on-year increase in terms of absorption at 9.5 million square feet in 2019 with 53.2 per cent growth from the 6.2 million square feet.

Hyderabad was also the city which added maximum stock at 9.9 million square feet.

Hyderabad’s unprecedented rise to the second largest market, after Bangalore, is indicative of two features, which bode well for its future. The quantum leap in absorption in 2018 and 2019 indicates its strong inherent potential.

Bangalore remains the biggest market with 15.6 mn sq. feet absorption in 2019, a year-on-year growth of 15.4 per cent over a large base of 13.5 mn square feet.

Chennai also registered good growth in fresh leasing with 8 mn sq. feet absorption, a YoY growth of nearly 60 per cent while Delhi NCR grew at 13.7 per cent at 10.89 mn sq. feet and Pune’s growth was flat at 6.8 mn sq. feet.

The combined absorption of the top 3 southern cities —Bangalore, Hyderabad and Chennai—constituted over 57 per cent of total office space absorption in 2019 compared to 52 per cent in 2018.