Covid-19 pushes net leasing of office space down 73% in April-June across 8 Indian cities

Net leasing of office space plunged 73.4 per cent in the April-June period across eight major cities due to sharp fall in demand because of the Covid-19 pandemic, according to Cushman & Wakefield. Net absorption of office space stood at 37.15 lakh sq ft during April-June 2020 as against 139.85 lakh sq ft in the year ago period as corporates and coworking players deferred their expansion plans, the property consultant said.

During the first half of 2020, the net office space leasing declined 57 per cent to 110.75 lakh sq ft from 255.48 lakh sq ft in the corresponding period of last calendar year.

“The net absorption in the second quarter 2020 stands at 3.72 million sq ft, which is lower by 49.5 per cent on a quarterly basis and 73.4 per cent lower on a yearly basis as fresh transaction activity was muted during the quarter,” C&W said in a statement.

Also, cities like Delhi NCR and Bengaluru saw negative absorption which also pushed the overall net absorption downwards, it added.

“As the world got more engaged to deal with the impact of coronavirus, the resilience of commercial real estate in India was tested. This is reflected in the dwindling demand and supply numbers in H1 (first half) 2020,” said Anshul Jain, Managing Director – South East Asia and India, C&W.

In an ever-evolving situation, he said, it would be difficult to predict the timeline within which commercial real estate in India might be able to restore its pre-Covid growth momentum.

“But, a certain level of normalcy could be expected in H2 (second half) as companies gradually resume their operations,” Jain said.

According to the data, net leasing in Mumbai rose to 16.45 lakh sq ft during April-June 2020 from 12.72 lakh sq ft in the corresponding period last year. In Delhi-NCR, the net leasing of office space stood at minus 3.58 lakh sq ft as against 9.52 lakh sq ft during the period under review.

Similarly, Bengaluru reported a negative net leasing of office space at minus 83,943 sq ft as against 23.63 lakh sq ft. Net office space leasing in Chennai fell to 5.23 lakh sq ft from 11.65 lakh sq ft, while Pune saw a sharp fall to 60,709 sq ft from 15.85 lakh sq ft.

In Hyderabad, demand for office space declined to 17.58 lakh sq ft from 57.78 lakh sq ft. Net office space leasing in Kolkata dipped to 1.14 lakh sq ft from 2.24 lakh sq ft, while in Ahmedabad the demand softened to 54,900 sq ft from 6.43 lakh sq ft.

Cushman & Wakefield, which is listed on the New York Stock Exchange, is a leading largest real estate services firm with approximately 53,000 employees in 400 offices and 60 countries.

In 2019, the firm had revenue of USD 8.8 billion across core services of property, facilities and project management, leasing, capital markets, valuation and other services.