CONTACT US
Share: Share on Facebook Share on Twitter Share on LinkedIn I recommend visiting cushmanwakefield.com to read:%0A%0A {0} %0A%0A {1}

India to Contribute 37% of the APAC Office Space Demand

17/01/2022

Bangalore is expected to absorb the maximum amount of office space in Asia Pacific, as India is expected to contribute to 37% of the total demand in 2022, Badal Yagnik, managing director - tenant representation, Cushman & Wakefield told ET.

“In Asia Pacific, total demand for office was 80 million sq ft, it came down to 30 msf in 2020 and in 2021 it came back to 60 msf. In 2022, we are expecting it to be 72 million sq ft and 2023 it will reach about 83 msf so it will reach the pre Covid level in 2023,” Yagnik said.

Despite the brief uncertainty during the second wave, the office market across the top 8 cities has fared well with a perceptible growth in the market activity, especially in the second half, according to perspective 2022 report by Cushman & Wakefield.

“In next 2-3 years India will maintain the 40% share. In India on an average 35 million sq ft is delivered. In 2021 it is 40 msf and in 2022 it is expected to be 46 msf. 25% of the new supply is already pre committed. We have an active 40 msf of demand and it will only grow up,” Yagnik said.

Barring a momentary lull in Q2, the office market has performed well in 2021 as companies started inking new deals. Meanwhile, exits have substantially declined across all markets and several pre-leases also became operational, especially in cities such as Bengaluru and Hyderabad.

Yagnik said that corporates have started focusing more on sustainability and employees health has become the priority.

“Most important thing which has gone into corporate is sustainability part of it. Entire conversation has changed to employees safety. Developers have also started focusing on this big time. Also, entire workplace design has changed. The density had gone down to 70 sq ft, now every corporate is talking about over 100 sq ft,” Yagnik said.

At about 50 million sq ft, gross leasing volume for 2021 is on par with 2020 and is a notch above the decadal average of 43 MSF.

“We estimate office demand to reach 57-60 MSF in 2022, registering a 15-20% growth on an annual basis. Leasing activity is likely to pick up pace as uncertainty erodes and the focus shifts towards sustainable business growth. Bengaluru, Mumbai, Delhi-NCR, and Hyderabad will continue to dominate the fresh demand in 2022,” Yagnik said.

The report mentions markets such as Noida and Navi Mumbai to perform well with growing interest from tech companies to set up larger centres. Pune and Chennai are also expected to bounce back strongly with growing occupier interest.

Tenants are actively discussing with developers while rebalancing/ optimizing the portfolio and are opting for early renewals wherever possible to negotiate better deals.

“We predict term renewals going up further in 2022 amidst the continued focus on CAPEX savings and alignment of medium to long-term portfolio strategies,” he said.

New completions at 40 MSF in 2021 are also on par with 2020, with Hyderabad, Bengaluru, and Delhi-NCR together recording nearly 2/3rds of the supply.

There were some short-term slippages as developers were focused more on projects with significant pre-commitments, and at the same time looking at the extent of demand recovery.

“We expect the supply situation to improve gradually in 2022 in line with improving market sentiments. Our estimates indicate the new supply across the top 8 cities could reach 45-46 MSF in 2022, a 13-15% growth on an annual basis, which would also be 30% higher than the decadal average,” Yagnik said.

Once again, Bengaluru and Hyderabad are likely to bring in 50% of the new space.

Cumulative office vacancy across the top 8 cities has increased by 350 bps since the pandemic. As such, physically vacant space has breached the 100 MSF mark for the first time in history.

Vacancy rates across top cities have increased by a minimum of 300 bps over the last 18 months.

“While some of this can be attributed to a slowdown in demand, the impact of space optimization can’t be ignored. Consolidation and rebalancing of portfolios among occupiers along with scheduled exits from some projects have also led to a rise in vacancy levels across cities,” the report said.

New supply has also brought new vacancies in the last two years. Nearly 45% of the new space that entered the market since April 2020 is now vacant. Meanwhile, another 8.0 MSF of vacant space has been added to the market as occupiers rightsized portfolios during this uncertainty.

“However, our estimates and demand analysis over the years suggest that the current vacancy levels of 17-18% are not a cause of concern and they are still on par (or even below) with some of the emerging markets in the region. Our analysis indicates that Pan India vacancy rates are likely to fluctuate at similar levels in 2022,” report said.

Delhi-NCR has registered the highest addition of vacant space primarily coming from non-core areas of Gurugram and Noida. Core locations in Gurugram have also witnessed an uptick in availability after years of ultra-low vacancy rates but a spurt in enquiries in H2 2021 suggests the market is set to tighten in 2022.

Hyderabad is another case in an example where vacancy in Madhapur is also around 10% but a good chunk of it is already under negotiations. In addition, nearly 60% of its (Madhapur) upcoming supply in 2022 is already pre-leased. Similarly, availability has increased in North Bengaluru but ORR on the other hand is extremely tight with vacancy rates below 5%. Other examples include Kharadi/Hadapsar in Pune, Pre-toll OMR, and Guindy in Chennai.

Read our full report on India Office Outlook 2022.

This article originally appeared in The Economic Times on Jan 14, 2022.

Related News

2023 2024 Asia REIT Market Insight
Total Asia REIT Market Values Recorded at US$252 Billion as at End of 2023, Slipping 7% Y-O-Y

Cushman & Wakefield’s latest Asia REIT Market Insight report, for 2023-2024, underscores the overall dynamism of Asia’s Real Estate Investment Trust (REIT) markets and demonstrated resilience in several markets. The traditional REIT market powerhouses of Japan, Singapore, and Hong Kong China continued to dominate. However, the emerging Chinese mainland and India REIT markets are adding new layers of opportunity and growth.  
 

Mandy Qian • 29/07/2024

World Book Day 2024 Vietnam_card
Cushman & Wakefield Vietnam Celebrates World Book Day

On the first Thursday of April, our Vietnam team celebrated World Book Day at the Cushman & Wakefield office in the form of book swapping. 

05/07/2024

Walk for Autism.jpg
Cushman & Wakefield Champions Autism Acceptance and Calls for Industry Wide Inclusion

Employees from global real estate services leader Cushman & Wakefield are stepping up and joining thousands of Australians walking 7k steps a day during May, to raise understanding and acceptance for Autistic individuals, particularly the 70 percent who experience mental health issues.

Jess Freeman • 27/05/2024

Catch 22 (image)
Asia Pacific Economy Forecast to Return to World-Leading Growth in 2022, Maintaining into 2023

The Asia Pacific economy is set to rebound in 2022 and regain top position in the second half of the year with an expected 4.5% real average annual GDP, according to Cushman & Wakefield’s latest report titled Catch ’22 - Asia Pacific Commercial Real Estate Outlook 2022.

Mandy Qian • 08/12/2021

China's 14th Five-Year Plan (image)
Cushman & Wakefield Launches its THINK-IN Report 2021 — China’s 14th Five-Year Plan — What’s Next for Real Estate?

Cushman & Wakefield, a leading global real estate services firm, today released its THINK-IN report 2021 - China’s 14th Five-Year Plan - What’s Next For Real Estate.

Mandy Qian • 21/10/2021

Finance Sector (image)
The Finance Sector — Reforms and Fintech to Propel Sector Demand for Leased Office Space in China

Cushman & Wakefield released its report titled The Finance Sector – Reforms and fintech to propel sector demand for leased office space in China.

Mandy Qian • 15/10/2021

Euromoney award (image)
Cushman & Wakefield Again Named Top Real Estate Advisor and Consultant Globally and in China by Euromoney

In the 2021 survey the firm was awarded a clean sweep of wins in China, Asia Pacific, and worldwide, in the four categories of Overall Agency, Valuation, Letting / Sales, and Research.

Mandy Qian • 16/09/2021

data center
Hong Kong's Data Center Market Stands Firm

While the pandemic and geopolitical tensions have impeded the development of data centers in multiple markets around the world, Hong Kong's data center market still stands firm.
 

30/08/2021

Government Work Report to Promote the Steady Development of Real Estate Market
Government Work Report to Promote the Steady Development of Real Estate Market

Cushman & Wakefield Releases Interpretation of Real Estate Policies in the 2021 China Government Work Report

08/03/2021

Shanghai and Beijing Place Among Global Data Center Leaders
With your permission we and our partners would like to use cookies in order to access and record information and process personal data, such as unique identifiers and standard information sent by a device to ensure our website performs as expected, to develop and improve our products, and for advertising and insight purposes.

Alternatively click on More Options and select your preferences before providing or refusing consent. Some processing of your personal data may not require your consent, but you have a right to object to such processing.

You can change your preferences at any time by returning to this site or clicking on Privacy & Cookies.
MORE OPTIONS
AGREE AND CLOSE
These cookies ensure that our website performs as expected,for example website traffic load is balanced across our servers to prevent our website from crashing during particularly high usage.
These cookies allow our website to remember choices you make (such as your user name, language or the region you are in) and provide enhanced features. These cookies do not gather any information about you that could be used for advertising or remember where you have been on the internet.
These cookies allow us to work with our marketing partners to understand which ads or links you have clicked on before arriving on our website or to help us make our advertising more relevant to you.
Agree All
Reject All
SAVE SETTINGS