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India’s record-breaking office market expected to stay strong

3 MIN READJanuary 10, 2020

The Indian office market is booming at the moment, recording historic highs in net absorption and project launches over the last 12 months. Per a report from JLL India, numbers this high haven’t been seen since 2011. 

Over 46 mn sq ft of net absorption was reported for last calendar year, as opposed to 33 mn sq ft in 2018 - a year on year increase of 40%. The strong expansion of IT/ITeS and co-working operators (which together take up well over half of the overall leasing market) in cities with good infrastructure has led the strong growth in demand so far, and this trend is expected to continue well into 2020. 

Bengaluru, New Delhi and Hyderabad accounted for ~70% of the net absorption, with the latter’s growing popularity amongst domestic investors powering it to record 10.5 mn sq ft over the year. A late spurt from Delhi in Q4 also pushed the city to new heights of around 11 mn sq ft. 

India also witnessed a higher level of new completions during 2019. Registering a growth of 45% YOY, 51.6 mn sq ft of new office was added to compensate for the influx of international companies placing their Asian bases in India to capitalise on the nation's massive tech-oriented generation. In line with net absorption, Bengaluru, Delhi NCR and Hyderabad together accounted for nearly 80% of the new completions in 2019. Each of these three cities witnessed more than 13 mn sq ft of new completions, with Bengaluru leading the pack at 13.9 mn sq ft.

Ramesh Nair, CEO & Country Head - India, JLL, said that the “establishment of REIT will lead to developers thinking more long-term and building better quality assets. With almost all top 10 office developers having institutional partners, we expect a further flight to quality, enhanced technical upgrades of existing portfolio, smart buildings, more focus on wellness and human experience. Future demand is expected to come from the data centre industry as well. Occupiers will continue their focus on cost, talent, agility, compliance and productivity”. 

The momentum of commercial real estate is projected to continue well into 2020 - with Hyderabad set to complete over 13 mn sq ft of office space in the next 12 months. 

 

For more information on the Indian office market and wider real estate market across all asset classes, active discussions will take part between senior key leaders at GRI Offices & Parks India 2020. 

Article by Matt Harris

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