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Office realty in big demand; Mumbai tops the deal charts


Mid-sized and large deals for office spaces have continued to gather momentum as the recovery in commercial real estate post Covid-19 pandemic is getting broad based as indicated by the rising number of leases and outright transactions across segments and key property markets.

The information technology and IT-enabled services segment is driving the absorption of offices as deals for office spaces above 100,000 sq ft remained high in IT office locations of Hyderabad, Pune and Bengaluru in 2022.

An estimated 53% of office leasing deals were for spaces measuring 100,000 sq ft or more in Hyderabad and Pune, while it was 51% in Bengaluru, showed a Knight Frank India study.

The country’s most expensive property market of Mumbai has seen 79% of its office transactions for less than 100,000 sq ft, while the National Capital Region and Chennai market saw 72% such deals each.

“Office leasing volumes in 2022 recorded at over 51 million sq ft, which is historically the second best. Within this, IT/ITeS driven markets of Bengaluru, Hyderabad and Pune saw more than 50% of their total office leasing by occupiers taking in excess of 1 lakh sq ft,” said Shishir Baijal, CMD, Knight Frank India.

According to him, the large space take up is usually for value-driven services such as research & development (R&D) and global capability centres (GCCs), which is a sign of India’s continued prowess in this area. He expects the momentum of office transactions to remain largely in line for 2023.

In Kolkata, around 70% and in Chennai 57% of office space transactions were for sizes below 50,000 sq ft. While Hyderabad, Pune and Bengaluru topped the list of cities in the above 100,000 sq ft segment. Global IT and manufacturing companies in these cities pushed demand for large-sized offices.Ahmedabad, the National Capital Region (NCR) and Mumbai witnessed higher traction for offices in the 50,000 to 100,000 sq ft category, with over 30% of transactions in this segment.

“Apart from the rise in demand for GCC set ups, the transactions are also witnessing growth given the increase in expansion by existing tenants at office parks,” said Vivek Rathi, director research, Knight Frank India.

The number of GCCs in India are set to surpass over 1,900 by 2025 from over 1,400 in 2020-21. The headcount in GCCs, according to recent reports, is also set to touch 2 million by 2025 from 1.4 million in 2020-21 led by abundance of talent, presence of a vibrant tech ecosystem and government policy support.

While global headwinds weighed down growth projections for the Indian economy over the course of the last one year, it was always apparent that India would still be the fastest growing large economy. The Reserve Bank of India’s recent 6.8% growth projection for 2022-23 makes India a leading force of growth across the Asia-Pacific region and the world at large.


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