Real Estate

Office leasing in top 6 cities at 27.4 million sq ft in 2020, down 51%: Savills India

Our Bureau Hyderabad | Updated on December 30, 2020 Published on December 30, 2020

The overall office space absorption across India’s six major cities stood at 27.4 million sq ft, in 2020 (down 51 per cent over 2019), led by Bengaluru, which showed strong resilience amid the global pandemic that severely impacted business activities across sectors.

According to Savills India, “After a record high in 2019, overall office leasing in 2020 saw a drop of almost 51 per cent as compared to the previous year. While office absorption in 2019 stood at 55.7 million sq ft (57.7 million sq ft including pre-commitments), the previous year saw around 47.3 million sq ft. Of the total office leases in 2020, around 57 per cent comprised large deals of more than 1,00,000 sq ft a deal”.

Bengaluru posted maximum office absorption with 6.8 million sq ft space take up in 2020. Despite a drop of 56 per cent as compared to last year, the city led the overall leasing across the top six cities. Following Bengaluru closely, Hyderabad registered leasing of 5.4 million sq ft in 2020.

Top 3 cities

Hyderabad took over NCR while the latter stood at the third place with approx. 4.4 million sq ft absorption in 2020. Like the previous year, the top three cities of Bengaluru, Hyderabad and NCR constitute around 61 per cent of the total leasing activity in 2020 as well.

Savills India also pointed out that Mumbai, recorded approximately 2.9 million sq ft. leasing through the year – the least absorption witnessed among the six cities, while Chennai witnessed a decline of just below 29 per cent.

“The overall story of 2020 is the one of survival, and most markets did exactly that. While the story of Indian office market in 2020 may not be as glorious as it was in 2019 and 2018, it still continues to strive and display resilience, in the face of Covid-induced slowdown. The fundamentals of Indian economy remain intact and we continue to witness strong leasing traction in sectors like warehousing and industrial. Now with vaccine in sight and businesses poised to gain momentum, we can expect to reach pre-Covid-19 levels soon,” said Anurag Mathur, CEO, Savills India.

IT sector

IT continues to remain the major occupier of office market constituting 51.7 per cent of total leasing in 2020 as compared to 46.3 per cent in 2019. Similarly Banking, Financial Services and Insurance (BFSI) occupiers’ share in 2020 was higher at 14.3 per cent compared to 10.6 per cent in 2019.

The co-working segment share declined to 8.5 per cent in 2020 from 14 per cent in 2019 as a result of occupiers widely adopting work from home policy.

The rental value change across micro-markets varied within a city compared to last year, with an average decline of about 7 per cent Y-O-Y in NCR, while Chennai and Hyderabad saw a 3 per cent Y-O-Y decline.

However, Mumbai and Pune markets sustained similar rental ranges as last year. It is important to note about Mumbai, despite its low leasing volumes, its vacancy fell by only 1 per cent from 2019 and delicately balancing its rentals at the same levels.

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Published on December 30, 2020
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