Office leasing in India during the second quarter of 2022 stood at 14.7 million square feet (msf), a three-fold jump from the year-ago period. Vacancy levels declined 100 basis points to 17 per cent, led by strong demand from tech and flex occupiers and steady influx of supply, according to a report by Colliers.
It added that rentals are likely to firm up in some markets by the end of 2022, led by an upswing in occupancy levels. “Industrial and warehousing demand stood at 4.5 msf in Q2 2022, a marginal drop of about 1.4 per cent year-on-year. Delhi-NCR accounted for the highest share at 28 per cent, followed by Chennai at 21 per cent share. Institutional Investments in Indian real estate touched $1.5 billion during Q2 2022, a 18.8 percent drop from Q2 2021. The next few quarters are likely to see Greenfield investments in the office and industrial & logistics sector," said the report, titled ‘reQ Real Estate Quarterly Q2 2022’.
It added that the RBI’s stance has moved from ‘accommodative’ to ‘neutral’ to control the elevated inflation rate. High inflation rate has led to a rise in construction costs by 10-12 percent which have impacted planned cash flows and project completions for developers.
“Gross absorption was noted at 14.7 mn sq ft during Q2 2022, a three-fold increase from Q2 2021. Bengaluru, Hyderabad, and Delhi-NCR accounted for almost 64 per cent share in overall leasing during Q2 2022. While we expect supply pipeline to be in tandem with pre-commitments in the market, we foresee some postponement of supply as developers grapple with rising costs," the report said.
