Hyderabad emerges as the biggest highlight, as Bangalore consolidates
its top position
·
At 46% IT & ITES sector drove the growth for
Grade A office spaces pan India
·
The trinity of Bangalore-NCR-Hyderabad set a new
absorption-benchmark, as they reached 15.6 mn sq.ft., 10.9 mn sq.ft. and 9.5 mn
sq.ft.. respectively, averaging over 10 mn sq.ft.. per market of absorption
amongst them.
·
Co-working spaces continued its momentum at 14%
share of office leasing
Bangalore,17th January 2019: International
Property Consultants, Savills India launched a comprehensive report Office Market Watch 2019 on country’s
top Office markets including Mumbai, National Capital Region, Bangalore,
Chennai, Pune and Hyderabad.The report highlights that Office Space demand in
2019 bettered the previous historic benchmark of 2018 by 22% amounting to a gross absorption of 57.72 mn sq.ft.The year 2020 too, is likely to be marked with
strong demand for quality commercial office space driven by several factors
like expansions, consolidations and upgrades to employee centric workspaces.
Anurag Mathur, CEO, Savills India said “The commercial segment,
especially, the office space market is going from strength to strength, beating
its own record of 47.3mn sq.ft. in 2018, to set a new one at 57.7 mn sq.ft.in
2019. This growth symbolises that office space across key markets is on a
strong footing, based largely on India’s increasing capabilities in technology
sector, rise in flexible spaces, formalisation of the Indian economy and the
growing offshoring by western corporations. Despite headwinds in the domestic economy,
we expect this growth to trend in 2020 as well. This should hold the overall Indian
real estate industryin good stead in the long-term.”
YOY Absorption in India (in mn sq.ft.)
|
|
2018
|
2019
|
Change
|
|
Bangalore
|
13.5
|
15.6
|
15.4%
|
|
Chennai
|
5.0
|
8.0
|
60%
|
|
Hyderabad
|
6.2
|
9.5
|
53.2%
|
|
Mumbai
|
6.2
|
6.9
|
11.3%
|
|
NCR
|
9.6
|
10.89
|
13.7%
|
|
Pune
|
6.8
|
6.8
|
0.0%
|
|
India
|
47.3
|
57.7
|
22%
|
*Source:
Savills India Research
·
The city of Hyderabad recorded the highest
year-on-year increase in terms of absorption. At 9.5 mn sq.ft. in 2019,
Hyderabad witnessed a growth of 53.2% from the 6.2 mn sq.ft.. space absorption in
the previous year. It was also the city which added maximum stock at 9.9 mn sq.ft..
·
Much like earlier years, Bangalore continues to
remain the biggest market in India, with 15.6 mn sq.ft. absorption in 2019, a
YOY growth of 15.4%. It is a commendable growth considering that it grew off a large
base of 13.5 mn sq.ft. absorption in the previous year.
·
The combined absorption of the top 3 southern
cities-Bangalore, Hyderabad and Chennai constituted over 57% of total
absorption in 2019 vis-à-vis 52%
recorded in 2018.
·
NCR is the third notable highlight of the yearand
was the only one apart from Bangalore to go past 10 mn sq.ft.. absorption,a YOY
growth of 13.7%.
·
Chennai also registered good growth in fresh
leasing and along with large volume pre-commitments, its absorption volumes
reached almost 8 mn sq.ft.., a YOY growth of nearly 60%
·
With absorptions of 6.9 mn sq.ft..Mumbai’sannual increase was 11.3% in
2019. Pune, having recorded a high in
the previous year, was the only market to register almost flat year in
2019.
Base rents across India showed
improvements in varying degrees. Bangalore and Chennai recorded significant
increases between 15% and 20% in different micro-markets; while Hyderabad’s
rentals remained constant for its higher-grade stock. Mumbai and Pune recorded
4-5% annual increase in rents, as NCR’s rents remained stable through 2019.
Strong absorption in 2019 led to a
marginal decline in vacancy-rates at 4.5% Hyderabad. Mumbai and Pune also witnessed
declines in vacancy rates at 13.9% and 4.3% in 2019 respectively, while
vacancy-rates inBangalore witnesseda rise of 7.54% in 2019. Chennai too experienced
a steep increase with its vacancy levels reaching 12.3% in 2019 owing to large
supply volumes along the Pallavaram-Thoraipakkam stretch. NCR was mostly stable
with a 1% rise from 2018 to reach 18% in 2019.
KEY FINDINGS ACROSS
TOP CITIES
BANGALORE
|
|
Absorption
|
Grade- A Stock
|
Vacancy
|
|
2018
|
13.5 mn sq.ft..
|
145.5 mn sq.ft..
|
5.9%
|
|
2019
|
15.6 mn sq.ft..
|
157.8 mn sq.ft..
|
7.0%
|
|
2020 (Forecast)
|
16.2 mn sq.ft..
|
175.1 mn sq.ft..
|
5-7%
|
·
Bangalore continues to lead in 2019 by a large
margin, saw leasing activity to the tune of 15.6 mn sq.ft.. with a YOY growth of
15.4%
·
Supply:
The city saw additional completions of around 12 mn sq.ft.with majority
completions being on the ORR, eastern peripheral business district including
Brookefield and north Bangalore.
·
Demand for office space was driven primarily by
technology, financial service companies and flexible working spaces as well. Together
they constituted approximately 70% of total leasing activity during 2019.
·
Average rentals of Peripheral North micro-market
has increased significantly by 25% YOY in 2019; whereas other micro-markets
like Peripheral East, CBD and SBD City saw an increase in rentals by 15- 20%
·
Demand
Outlook: YOY growth of 4 to 5% leasing activity is forecast over the 1 year
DELHI NCR
|
|
Absorption
|
Grade- A Stock
|
Vacancy
|
|
2018
|
9.6 mn sq.ft..
|
103.3 mn sq.ft..
|
17.0%
|
|
2019
|
10.9 mn sq.ft..
|
117.3 mn sq.ft..
|
18.0 %
|
|
2020 (Forecast)
|
12.0 mn sq.ft..
|
124.6 mn sq.ft..
|
16-18 %
|
·
National Capital Region (NCR) recorded an office
space absorption increase of 14% YOY in 2019 to reach 10.9 mn sq.ft..
·
In NCR, Gurgaon saw a YOY growth of 15%, while
Noida recorded a 26% YOY increase.
·
In Delhi, vacancy levels in Jasola stood above
15% levels, whereas in Saket, the vacancy levels were approximately 10%. In all
other micro-markets of Delhi, the vacancies recorded were around 5%.
·
In Gurgaon, vacancy levels in Sohna Road, SPR
and Golf Course Extension Road were reported to be high at around 30%. DLF
Cyber City, Golf Course Road and Udyog Vihar reported lower vacancies. The
levels in Noida Expressway micro-market were reported at 14-15% whereas Sector
62 was higher, close to 25%.
·
Base rents remained largely stable across most
micro-markets, in all 3 key cities comprising NCR, on a YOY basis. However, in
Delhi, the Aerocity micro-market saw an increase of 5-7%. Similarly, in
Gurgaon, rentals recordedan upward movement of approximately 7%, in DLF Cyber
City and on MG Road.
·
Demand
Outlook: NCR is expected to have a YOY growth of 8-10% in leasing activity
over the next year. The expected absorption could reach 12 mn sq.ft.. during
the year 2020.
MUMBAI
|
|
Absorption
|
Grade- A Stock
|
Vacancy
|
|
2018
|
6.2 mn sq.ft..
|
120.3 mn sq.ft..
|
16.1%
|
|
2019
|
6.9 mn sq.ft..
|
124.1 mn sq.ft..
|
13.9%
|
|
2020 (Forecast)
|
7.2 mn sq.ft..
|
130.4 mn sq.ft..
|
12-14 %
|
·
Mumbai Metropolitan Region (MMR) saw an
absorption of 6.9 mn sq.ft.., a YOY increase of 11% in 2019.
·
Financial Services, Technology, along with
Engineering & Manufacturing sectors constituted over 60% of total leasing
activity during 2019. Coworking spaces accounted for approximately 9% of the
total absorption.
·
Vacancy
levels dropped from about 16% in 2018 to approximately 14% in 2019. However,
micro-markets of Navi Mumbai stood at around 20% and North Central Mumbai
reported vacancy of approximately 16%
·
Average rental growth for most micro-markets was
recorded at 5% for Thane, Navi Mumbai and BKC. The SBD of Eastern Suburbs
witnessed highest annual rental growth of approximately 10%.
·
Demand
Outlook: In Mumbai, absorption
is likely to increase by 4-5% in 2020 and is expected to reach 7.2 mn sq.ft...
Savills
Savills
is a leading global real estate service provider listed on the London Stock
Exchange. Operating out of more than 600 offices across the world, it employs
more than 39,000 people in over 70 countries. Savills advises corporate,
institutional and private clients, seeking to acquire, lease or realise the value
of prime properties across key markets. It provides seamless solutions
throughout the real estate lifecycle.
Savills India
Savills
in India is a full-service advisor offering Commercial Advisory &
Transactions, Project Management, Capital Markets, Valuations &
Professional Services, Research & Consulting, Industrial & Logistics
and Residential services. The blend of in-depth, sector specific knowledge with
entrepreneurial spirit gives clients access to unique and innovative real
estate solutions backed up by the highest quality of service delivery.
Savills
is India’s premier professional international property consulting firm. Savills
began its India operations in early 2016 and has since seen significant growth.
With offices in Bengaluru, Mumbai, Delhi NCR, Chennai and Pune; and also having
serviced clients in Hyderabad, Kolkata, Chandigarh, Guwahati, Bhubaneswar,
Vadodara and Indore, Savills India has a strong pan-India platform to deliver
to its clients
ANNEXURE
CHENNAI
|
|
Absorption
|
Grade- A Stock
|
Vacancy
|
|
2018
|
5 mn sq.ft.
|
67.7 mn sq.ft.
|
6.6%
|
|
2019
|
8 mn sq.ft.
|
71.2 mn sq.ft.
|
12.4%
|
|
2020 (Forecast)
|
8.3 mn sq.ft.
|
81.1 mn sq.ft.
|
11-13%
|
·
Chennai witnessed one of the largest YOY growths
at 60% in2019, with 8 mn sq.ft.. space absorption from 5 mn sq.ft.. in 2018.
·
Vacancy levels saw a spike in Chennai from 6.6%
in 2018 to 12.4% in 2019, representing a market that anticipates further
growth.
·
Key southern stretches of Chennai, namely, OMR
(Pre-Toll) in the south, and the Guindy – Mount Poonamallee stretch to the
south west, witnessed growth in rentals at 23% and 11% respectively.
·
Demand
Outlook: The expected absorption in 2020 is pegged at 8.3 mn sq.ft.,
thereby hoping to see a 3 to 4% growth in leasing activity
PUNE
|
|
Absorption
|
Grade- A Stock
|
Vacancy
|
|
2018
|
6.8 mn sq.ft.
|
46 mn sq.ft.
|
4.7%
|
|
2019
|
6.8 mn sq.ft.
|
49.5 mn sq.ft.
|
4.2%
|
|
2020 (Forecast)
|
7 mn sq.ft..
|
53.7 mn sq.ft.
|
3-5 %
|
·
In 2019, Office Space absorption is Pune
remained the same as 2018 at 6.8mn sq ft.
·
The technology sector constituted over 55% of
the office space share, whereas the coworking segment stood at 20% in 2019.
·
Continued traction in leasing activity during
the year led to decline in vacancy levels from about 4.7% in 2018 to 4.2% in
2019.
·
Most micro-markets in Pune witnessed an increase
of 3 to 5% in rentals. Peripheral Business District (PBD) East and Central
Business District (CBD) witnessed a rental growth of 4.4% and 3.7%
respectively.
·
Demand
Outlook: The office market in Pune is likely to see an absorption of around 7
mn sq.ft.. in 2020.
HYDERABAD
|
|
Absorption
|
Grade- A Stock
|
Vacancy
|
|
2018
|
6.2 mn sq.ft..
|
47.2 mn sq.ft..
|
5.6%
|
|
2019
|
9.5 mn sq.ft..
|
57.1mn sq.ft..
|
4.5%
|
|
2020 (Forecast)
|
10.5 mn sq.ft..
|
69.9 mn sq.ft..
|
5-7%
|
·
Hyderabad witnessed a record total absorption of
9.5 mn sq.ft., and growth of 53.2% YOY.
·
Strong leasing led to a marginal decline in
vacancy levels which decreased to 4.5% in 2019, from 5.6% in 2018.
·
The micro-markets of Secondary Business
District-I (SBD-I), primarily Madhapur and SBD-II, primarily Gachibowli,
constituted over 90% of total leasing activity in the city. Absorption in
Madhapur almost doubled in 2019.
·
Average rentals increased by 14% in Gachibowli
and by 9% in Madhapur.
·
Demand
Outlook: The office market in Hyderabad can expect a further 9-10% increase
in absorption in 2020, there by crossing the 10mn sq.ft.. mark
Savills
Savills
is a leading global real estate service provider listed on the London Stock
Exchange. Operating out of more than 600 offices across the world, it employs
more than 39,000 people in over 70 countries. Savills advises corporate,
institutional and private clients, seeking to acquire, lease or realise the
value of prime properties across key markets. It provides seamless solutions throughout
the real estate lifecycle.
Savills India
Savills
in India is a full-service advisor offering Commercial Advisory &
Transactions, Project Management, Capital Markets, Valuations &
Professional Services, Research & Consulting, Industrial & Logistics
and Residential services. The blend of in-depth, sector specific knowledge with
entrepreneurial spirit gives clients access to unique and innovative real
estate solutions backed up by the highest quality of service delivery.
Savills
is India’s premier professional international property consulting firm. Savills
began its India operations in early 2016 and has since seen significant growth.
With offices in Bengaluru, Mumbai, Delhi NCR, Chennai and Pune; and also having
serviced clients in Hyderabad, Kolkata, Chandigarh, Guwahati, Bhubaneswar,
Vadodara and Indore, Savills India has a strong pan-India platform to deliver
to its clients.
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