Fresh leasing dominates India’s office market in Q4 2021 | Real Estate Asia
, India

Fresh leasing dominates India’s office market in Q4 2021

It surged 77% to 12.2 million square feet during the quarter.

India’s office property market witnessed a sharp recovery in the second half of the year, with gross leasing volumes hitting levels higher than the previous year’s. 

According to data from Cushman & Wakefield, fresh leasing was the primary driver of leasing activity, both on a quarterly and annual basis. At 12.2 msf, fresh leasing clocked a 77% q-o-q growth in Q4 and accounted for nearly three quarters of the quarterly leasing volume. For the full year, 29.4 msf of fresh demand was recorded, a 14% y-o-y growth. 

Here’s more from Cushman & Wakefield:

Emerging from the second wave, the second half of the year 2021 remained occupier-friendly despite a strong pick-up in leasing momentum, and this situation prevailed in Q4 as well. However, the window of opportunity for occupiers to reserve space in quality assets has been narrowing considerably as rents are expected to bottom-out soon in these assets. 

Despite re-emergence of Covid (the Omicron variant) towards the end of fourth quarter, the broader impact on the office market is believed to be negligible with a further pickup in leasing momentum expected in 2022. A brighter economic outlook and rising vaccination coverage is driving sustained improvement in market sentiments. 

The megacities of Bengaluru, Delhi NCR, and Mumbai were the key growth drivers in leasing activities throughout 2021, followed by Hyderabad. In the fourth quarter, a large part of the leasing volume was contributed through fresh leasing (over 70%) as against the previous three-quarter average share of 47-50%. 

While Bengaluru saw a number of large term renewals in the third quarter, fresh leasing picked up towards the end of the year with pace of market recovery gaining momentum. Mumbai and Hyderabad finished 2021 on a strong note as well with fresh leasing at multi-quarter highs, and occupiers in Mumbai looking to take advantage of market conditions to complete renewals.

Term renewals

Term renewals stood at 2.6 msf in Q4, a drop of 63% as compared to the previous quarter. Yet, on annual basis the quantum of term renewals was 16.2 msf in 2021, accounting for 31% share in overall leasing volume and a growth of 53% over the previous year. Occupiers across major cities continued to seek favourable terms from developers/landlords, wherever possible, in order to complete lease renewals. 

Markets such as Mumbai and Pune were the major contributors to renewals in Q4 and with market conditions expected to become less favourable in the near-to-medium term, occupiers are likely to push for the right incentives to sew up lease renewals. 

Pre-leasing activity

At 1.4 msf, pan India pre-leasing in Q4 was over 2.5x that of the previous quarter but down by around 19% on a y-o-y basis. Delhi NCR and Chennai accounted for nearly 70% of pan India pre-leasing in Q4 with Bengaluru contributing 28%. For the full year, preleasing stood at 6.9 msf, down by around 46% from 2020, though markets such as Hyderabad and Bengaluru continued to do well, accounting for well over half of pan India pre-leasing in 2021. 

With the market witnessing a sharp recovery and more occupiers expected to finalize their medium to long term growth plans, pre-leasing activities could post a healthy rebound in 2022. Moreover, India’s reputation as a tech offshoring destination and the country’s key role in driving digital transformation for global multinationals are likely to translate into greater space commitments over the next few quarters. 

Going forward, tech focused markets such as Bengaluru, Chennai and Hyderabad are likely to drive pre-leasing activities with several start-ups and multinationals looking to leverage India’s substantial tech expertise and setting up more high-end R&D and global delivery centres. 

Occupiers look supply-side restraint in the immediate future, particularly quality supply in core markets, could be a concern and pre-leasing of available spaces is critical as businesses plan their return to work for employees.


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