India's three key southern cities -- Bengaluru, Chennai and Hyderabad -- dominated office demand with the contribution of 59 per cent of the total office leasing across the top 7 cities during the quarter ended June, according to Vestian.
As per the data, the combined office leasing in three major southern cities stood at 8.2 million square feet, out of a total 13.9 million square feet absorbed in the April-June quarter of this calendar year.
Across seven major cities, office leasing fell 6 per cent to 13.9 million square feet during April-June as against 14.8 million square feet in the year-ago period due to delays in decision-making by large domestic firms and MNCs amid global uncertainties.
However, the demand was up 17 per cent compared with the previous quarter. Commenting on the findings, Vestian CEO Shrinivas Rao said, "Despite global headwinds, the Indian economy has performed well. India's GDP growth rate showed improvement in the last quarter of FY23. Financial markets also performed well, reflecting positive sentiment in the country."
"Hiring intentions for Q3 2023 improved, indicating optimism about India's growth prospects. The resilience of the Indian economy was reflected in the Indian office market as well, with increased absorption and a fading impact of funding challenges," he said. Rao noted that absorption and new completions increased significantly during the June quarter as compared to the previous quarter.
He highlighted that the technology sector dominated leasing activities, followed by engineering and manufacturing, while flexible spaces also gained traction due to cautious leasing decisions amidst market uncertainty. "As global markets stabilize, the second half of the year is expected to see increased real estate activities across the country," Rao said.
April-June 2023 vs April-June 2022: Chennai saw an 83 per cent rise in leasing to 2.2 million square feet from 1.2 million square feet. The leasing in Bengaluru decreased 12 per cent to 3.7 million square feet from 4.2 million square feet. Hyderabad witnessed a marginal fall of 4 per cent to 2.3 million square feet from 2.4 million square feet.
In Maharashtra's two major office markets, the leasing in Mumbai fell 25 per cent to 1.8 million square feet from 2.4 million square feet. But in Pune, the demand was up 6 per cent to 1.8 million square feet from 1.7 million square feet.
The office leasing in Delhi-NCR remained subdued and fell 5 per cent to 2 million square feet from 2.1 million square feet. In Kolkata, the leasing activities plunged 88 per cent to 0.1 million square feet from 0.8 million square feet. Ø The technology sector exhibits a commanding presence in leasing activities, capturing the highest market share of 26 per cent in the June quarter. While the engineering and manufacturing sector accounted for 19 per cent of the leasing activity, flexible spaces captured a respectable share of 18 per cent, the report said.
