Real Estate

Covid-19 impact: India’s office space absorption likely to drop by 4.1 to 4.6 million sq ft

Anil Urs Bengaluru | Updated on April 02, 2020 Published on April 02, 2020

A representational image

Due to the coronavirus (Covid-19) effect, India’s office space absorption is likely to see lower absorption to the extent of 4.1 to 4.6 million square feet in the near term (up to six months). For the whole year 2019, total office space absorption was 58.6 mn sq ft.

“We believe that India’s office sector, which has seen a robust run over the last three years, is likely to see lower gross absorption in 2020, across the top seven cities, stemming from delays in decision-making arising from the ongoing Covid-19 outbreak,” said Colliers International.

It further said, “While we anticipate leasing delays of up to a quarter, if the current lockdown extends beyond April 15, we can expect delays of up to two quarters. Revision of expansion plans and business strategy should adversely impact near-term space take-up. Multinational companies with head offices in the US or Europe will probably postpone decision-making. And led by the current lockdown, we anticipate construction completions will be delayed, pushing occupancy to later quarters.”

Across the seven major Indian cities, the IT-Business Process Management sector continued to dominate the leasing activities in the first quarter (Q1) 2020, accounting for 55 per cent share in leasing. Flexible workspace operators accounted for about 15 per cent of the gross leasing in Q1 2020.

Ram Chandnani, Managing Director, Advisory & Transaction Services, India, CBRE South Asia, said, “As the Covid-19 crisis develops in the UK, CBRE Research is watching the residential market closely. Like many industries in the UK, we expect a period of inactivity in the residential sector, as the country hunkers down to fight the virus. We will continue to closely monitor the situation and report further in the coming weeks.”

Sankey Prasad, Managing Director and Chairman, Colliers India, said, “While the Indian market is likely to see adverse impact from the ongoing Covid-19 pandemic, India is relatively better placed in terms of economic growth, with GDP expected to grow at 4.4 per cent. Going ahead, demand from resilient sectors such as technology should be stable, with pharmaceuticals, e-commerce and logistics sectors also increasing.”

Published on April 02, 2020

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