Eight Indian cities record leasing of 22.2 million sq ft in H2 2020: Report

NEW DELHI: The office market in top eight cities recorded transactions of 22.2 mn sq ft in the July – December 2020 period, whereas new completions were recorded at 17.2 million sq ft in the same period, according to a recent report by Knight Frank India.

The year began on a high note with office leasing achieving 96% of the quarterly average of 2019 in Q1 2020. However, the government-imposed lockdown to combat the fury of the pandemic, led to temporary economic inactivity and translated into a sharp fall in office leasing activities in Q2 2020. With the return to normality, gross leasing revived to 31% of the quarterly average of 2019 in Q3 2020, eventually surging to a 115% in Q4 2020.

Mapping the performance on a quarter-on-quarter (QoQ) basis, office transactions for the eight cities grew by a massive 271% in Q4 2020 to 17.5 million sq ft as against 4.7 million sq ft in Q3 2020. Pre-commitments contributed 24% of the total transacted volume of 17.5 million sq ft in Q4 2020, signifying that businesses are re-initiating expansion plans in the new normal.

In terms of the share of sectoral occupiers, Information Technology (IT/ITeS) sector dominated with a 41% share in H2 2020, followed by BSFI and Manufacturing sectors with 16% each, while Other Services and Co-working sectors recorded 17% and 10% respectively.

Bengaluru witnessed a surge of 8% year-on-year (year-on-year) to 7.5 million sq ft in H2 2020 in leasing activities.

Average office rents in Bengaluru, Chennai and Hyderabad maintained 2019 levels despite the volatility experienced in 2020. Rents in Mumbai, Pune and NCR, however, fell by 5.6%, 6% and 4.4% respectively.

A significant 33% of the area transacted by BFSI sector companies occurred in Hyderabad, while Bengaluru accounted for the highest share of the transactions executed by Information Technology, Manufacturing and Co-working sector companies at 35%, 39% and 45% respectively.

New office completions in 2020 dropped by 42% year-on-year to 35.5 million sq ft. Half-yearly growth numbers for new completions declined by 54% year-on-year to 17.2 million sq ft.