The overall office market in India witnessed a net absorption decrease during Jan to March 2021.
The overall office market in Delhi NCR witnessed a net absorption increase of 5 per cent in Q1 2021 quarter-on-quarter (Q-o-Q), with 1.07 million sq. ft, according to JLL Office Market Update – Q1 2021. Net Absorption includes fresh leasing in existing buildings and pre-commitments in the buildings that are getting operational in the quarter, and excludes exits/terminations, churns, renewals and pre-commitments in future supply.
Noida contributed 55% of the net absorption, backed by strong pre-commitment in the new completions followed by Gurugram followed with a contribution of 38%. Select big-ticket transactions in Gurugram and Noida areas contributed substantially to the leasing activity. There were few relocations by occupiers in a bid to reduce real estate cost and obtain fresh office spaces on attractive lease terms. IT/ITES, BFSI, Healthcare, legal and consulting firms dominated leasing during the quarter.
“Delhi NCR continues to be a vibrant location for the office market with well-established submarkets and corridors. While Gurgaon and Noida have taken the lead in terms of development and infrastructure, the city itself continues to remain a highly preferred location. In total, eight projects totaling 4 million sq. ft were added to the stock which stood at 129 million sq. ft at the end of the quarter,” Manish Aggarwal, MD, Delhi NCR, JLL India.
“NCR office market remains one of healthy commercial office space take-up and strong demand from IT/ITES, BFSI and law firms has fueled the growth momentum thereby showing strong commercial growth in the capital city,” he further added.
The vacancy rate stood at 29.3% as at the end of quarter, increasing by 140 bps over the previous quarter. Vacancy levels rose in select prominent prime business districts where occupiers either downsized current occupancies or shifted to locations with relatively lower rents. Rents remained stable with developers offering increased rent-free periods on a case-by-case basis. It is expected that rents will continue to remain rangebound in the short-term as leasing momentum in the next few quarters will mainly hinge on the containment of the second wave of COVID-19 cases.
The overall office market in India witnessed a net absorption decrease of 33% in Q1 2021 quarter-on-quarter (Q-o-Q), with 5.53 million sq. ft leased during Jan to March 2021. On a year-on-year (Y-o-Y) basis, net absorption in Q1 2021 stands at 64% of the levels witnessed in Q1 2020. Bengaluru, Hyderabad and Delhi NCR accounted for nearly 80% of the net absorption during the quarter. Moreover, Bengaluru and Delhi NCR were the two markets which witnessed an increase in net absorption when compared to Q4 2020.
“While 2020 ended on a relatively high note, there was still uncertainty in the market with respect to resumption of business as usual. Occupiers continued to adopt a cautious approach and focused on reassessing their real estate portfolios and long-term commitments. To add to the woes, increasing fears of a spike in COVID-19 cases in the second half of March further pushed the occupiers to press pause again and postpone their real estate decisions,” said Dr. Samantak Das, Chief Economist and Head of Research & REIS, India, JLL. “While net absorption is likely to hover around 25-30 million sq ft. This will be at par with the net absorption levels witnessed during 2020,” he added.
Source : Financial Express