New office supply in India rose by 4% in H1 2021

Bengaluru, Delhi, and Mumbai made up around 69 percent of the total leasing activity in H1 2021 across the country’s top cities  

According to a report by Savills India, office space leasing activity across six major Indian cities stood at approximately 10.9 million square feet, reported ET Realty.com.  

In the January-June 2021 period, office absorption was down by 38 percent from the same period a year earlier.  

Bengaluru, Delhi-NCR, and Mumbai made up around 69 percent of the total leasing activity in the first half of 2021 across top cities of the country.  

Bengaluru continued to lead with 4.1 million square feet, representing 37 percent of leasing activity in H1 2021. Following is Delhi-NCR, which saw two million square feet of leasing activity, a 37 percent year-on-year decline.  

Mumbai and Hyderabad came in third with around 1.4 million square feet. However, Hyderabad saw a sharper decline of 46 percent, while Mumbai saw 39 percent.  

Meanwhile, Pune recorded approximately 0.9 million square feet leasing, and Chennai saw 1.1 million square feet leasing activity.  

Anurag Mathur, CEO of Savills India, said, “The second wave of the pandemic has forced most organisations to reinstate their work from home policy once again dampening the overall sentiment of the office market. We believe this to be only a temporary pause, as amid the crisis, we did continue to see large lease deals being signed in key markets, symbolic of occupiers’ plans to return to office.”  

The technology (IT) occupiers continue to lead office demand with a 51 percent share, followed by the banking, financial services and insurance (BFSI) sector.  

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Moreover, new supply increased by four percent at 18 million square feet in H1 2021 from the same period a year ago.  

In H1 2021, the overall vacancy levels increased to 16.2 percent at the end of June, as supply addition exceeded the pace of leasing activity. Prime locations with limited availabilities saw stable rents while a few micro-markets have seen a sharper decline as landlords exhibited flexibility to attract new clients.