Mumbai Grade A office net absorption to reach up to 6.5m sq ft this year

And new supply is expected to hit up to 8.5m sq ft. 

The Mumbai office market is likely to be driven by the BFSI and Manufacturing sectors. In a report, JLL said they expect healthy space take-up in quality assets in the near term and for the vacancy rate to be range-bound.

In 2024, Grade A supply of 8 to 8.5 million sq ft is expected according to JLL data, with the net absorption likely to be around 5.5 to 6.5 million sq ft. Occupiers may look for opportunities by relocating to relatively cheaper submarkets to manage their portfolio costs.

Here’s more from JLL:

The overall leasing activity during the quarter was 2.2 million sq ft, marginally higher q-o-q. In H1 2024, leasing activity recorded a historic high of 4.3 million sq ft over all the previous H1 performances.

The BFSI sector dominated the leasing activity with 22.3%, followed by the IT/ITeS sector. The quarter recorded a net absorption of 1.6 million sq ft, while the net absorption in H1 2024 was 3.1 million sq ft, the highest since 2017.

Supply improves over the previous quarter

In Q2 2024, a supply of 1.8 million sq ft came on stream, entirely driven by the Eastern Suburbs submarket. Raheja Cignus, with 0.8 million sq ft, and The Epicentre, with 0.5 million sq ft, were amongst the major completions in Q2 2024.

Marathon Millennium Phase 1 with 0.3 million sq ft and 247 Park’s refurbished floors with 0.2 million sq ft were also amongst the completions during the quarter.

Rents increase marginally in Q2 2024

Rents increased by 1.1% q-o-q in Q2 2024 and were up by 3.7% y-o-y. The increase was primarily on the back of the Western Suburbs and SBD BKC submarkets. These submarkets witnessed a rise of 1.6% and 1.4% q-o-q, respectively.

Capital values rose faster than rents in Q2 2024, compressing yields. Investors continued to look for lucrative opportunities in quality assets and were also open to attractive options to buy stressed assets.