Office sector to attain new benchmarks this year, says JLL Research
· While the market exhibited a 21% growth y-o-y during H1 2019, net absorption across top seven cities touched nearly 22 mn sq ft
· New completion expected to reach 47 mn sq ft by end of 2019
· Bengaluru dominated the top rank with 30% share of the net absorption. Hyderabad followed being the second best with 27% share, seeing the biggest jump
Mumbai, 31 July 2019 – Steady economic growth, favourable policy environment, growing preference of global occupiers for Indian offices and listing of first Real Estate Investment Trust (REIT) in the country have put the India office market on a growth path, according to the half yearly update (H1 2019 – January to June 2019) by JLL India released today. As a result, the net absorption is expected to record a new high of 42 mn sq ft by the end of 2019, the company said in its release.
It said, the office market continued its strong streak and exhibited a 21% growth Y-o-Y during H1 2019. Net absorption across the top seven cities touched nearly 22 mn sq ft, i ndicating optimism amongst occupiers with continuity of governance and a stable government. A ramp-up by co-working players (15% of overall leasing) and occupiers in the IT/ITeS space (37% of overall leasing) drove the strong growth in demand, it added.
India Office Market Snapshot
H1 2018 (mn sq ft)
H1 2019 (mn sq ft)
Y-o-Y G rowth (%)
Source: JLL REIS, Note: Top 7 cities include Delhi NCR, Mumbai, Bengaluru, Chennai, Hyderabad,
Pune and Kolkata
“The current business scenario offers a favourable expansion environment to occupiers. Moreover, it also offers investors the option to look at maximizing their returns through investment into completed properties under REIT. The REIT listings by the Embassy-Blackstone Group Company clearly suggests that the commercial real estate in the country has matured and evolved in the past decade, post the global financial crisis. However, there is still a dearth of investment-worthy properties in the country. As a result, developers are focusing on increasing the supply of Grade A properties. We expect the momentum to remain robust in the second half of 2019 too ,” said Ramesh Nair, CEO & Country Head, JLL India.
As per the update, Hyderabad saw a significant surge with net absorption multiplying almost four times as compared to the corresponding same period last year to 5.8 mn sq ft in H1 2019 from 1.5 mn sq ft in H1 2018. This pushed the share of Hyderabad to around 27% in H1 2019 from 8% during the same period last year. It added, strong expansion plans of IT/ITeS, BFSI and co-working occupiers amidst sturdy business confidence have led to the growth. As has been the trend, Bengaluru’s position remained unparalleled with a share of 30% which reported 6.5 mn sq ft of net absorption during H1 2019.
Hyderabad is seeing a stupendous rise in demand. The net absorption in the city is expected to almost touch the levels of Bengaluru by the end of 2019. Delhi-NCR is anticipated to make a strong comeback during the year, with net annual absorption likely to rise by 22%, it added.
As per the update, 2019 will also set a new benchmark in terms of new completions which is expected at about 47 mn sq ft. It added, Hyderabad is likely to lead on new completions at 13 mn sq ft in 2019. Bengaluru and Delhi NCR will follow Hyderabad, it said. “This clearly indicates that quality supply will continue to draw in occupiers, willing to pre-commit especially in cities like Bengaluru and Hyderabad, where vacancies con tinue to remain tight and in single digits,” said Samantak Das, Chief Economist and Head of Research & REIS, JLL India.
The update added, new completions to the tune of 24 mn sq ft was witnessed during H1 2019, registering a robust growth of 16% Y-o-Y. Bengaluru accounted for the largest share in terms of new completions at 35%, it said.
It added, this was followed by Hyderabad which saw nearly 5.5 mn sq ft of new completions, forming 23% of the overall new supply across the top seven cities. At the same time, Delhi NCR also constituted nearly 23% of the new completions at 5.7 mn sq ft.