Pan India gross lease volume witnessed a 13% fall after the spike seen in Q2-23. One of the main reasons for this decline was a cautious approach from occupiers towards large-sized transactions. Mumbai and Delhi-NCR accounted for 45% of the volume in Q3, with Bengaluru and Hyderabad following. With a 70% share of fresh leasing in the overall GLV, there seems to be an optimistic outlook for the Indian economy and real estate. Moreover, the rising rate of employees returning to the office and, thus, a steep rise in residential rents across most cities suggests potential larger transactions ahead.
Net absorption stayed strong at 8.3 msf. The onset of projects with moderate-to-healthy preleasing kept the net absorption numbers resilient, a trend that seems to percolate into the fourth quarter. Additionally, rents are predicted to stay stable. However, a few prime micro markets, such as BKC, ORR, and Guindy, recorded tight vacancies that could lead to upward pressure on rents.
Key Highlights
- 15.1 msf gross leasing volume (GLV) in Top 8 cities in Q3 2023; a 13% decline both on y-o-y and q-o-q basis
- Mumbai was the leading market in terms of pan-India gross leasing volumes in Q3, accounting for a share of around 23%, followed by Delhi NCR, Hyderabad and Bengaluru shares of 22%, 16% and 15% respectively
- IT-BPM accounted for the highest share (~31%%) in quarterly leasing, followed by BFSI and engineering & manufacturing with 14% and 13% shares, respectively
- 10.7 msf of new completions were recorded in Q3 2023 with Bengaluru accounting for ~30% share, followed by Hyderabad (21%) and Pune (15%). Supply declined by around 10% on a q-o-q basis
- Net absorption in Q3 2023 stood at 8.3 msf, an increase of 32% on a quarterly basis and comparable to quarterly average volumes seen in 2022.
