Office market vacancy levels in 4 out of 6 top cities in single digits

Anil Urs Bengaluru | Updated on March 18, 2020 Published on March 18, 2020

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Four out of the top six cities in India, except for Mumbai and NCR, have single-digit vacancy levels in the office market. This is driven by IT and ITeS companies.

“The problem of supply crunch is acute in the markets of Pune and Bengaluru which had a city-level vacancy of 4.2 per cent and 4.8 per cent respectively at the end of 2019,” said Shishir Baijal, Chairman & Managing Director, Knight Frank India.

“For Mumbai and NCR, the vacancy levels may be higher at the city-level. However, for the sought-after business districts of Bandra Kurla Complex (BKC) and Lower Parel in Mumbai and Golf Course Extension Road and DLF Cybercity in Gurugram, the vacancy levels are in single digits,” he added.

Baijal further said, “The availability of vast talent in India in the fields of Science, Technology, Engineering and Mathematics (STEM) and the cost arbitrage make India one of the most attractive office destinations for companies in the BFSI and IT sectors. A balanced demand-supply equilibrium has led to double-digit rent growth in most leading Indian markets, making the investment premise very promising, Private equity investment of $13 billion is a testament to this fact.”

Since 2011, the Indian real estate sector has received equity investment of $22.7 billion across office, retail and warehousing assets. Of this, the Indian office assets garnered 57 per cent share or $13 billion worth.

Six Indian cities top APAC region

Knight Frank Research records revealed that six out of the top eight Indian cities feature in the top 10 markets in terms of annual leasing transaction volumes in the APAC region in 2019.

“Some of the Indian cities have stepped on the pedestal and stolen the limelight from the other cities in the Asia-Pacific (APAC) region,” said Baijal.

Bengaluru at 15.3 million square feet, and Hyderabad at 12.8 million square feet were the second- and third-largest office markets in the APAC region in terms of office leasing transactions, followed by Mumbai at 9.7 million square feet and the National Capital Region at 8.6 million square feet. These cities feature ahead of Beijing, Shanghai, Singapore, Jakarta, Kuala Lumpur and several others in the APAC region.

Published on March 18, 2020
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