Office space net absorption is expected to be around 20 million square feet, in line with that of 2020 as occupiers continue to focus on their CRE portfolio optimisation, mentioned a recent report by Colliers.
During Q1 2021, total Grade A gross absorption for the top six Indian cities was 4.3 million square feet (396,000 square meters), a decline of 49.8% YoY, as per the latest Colliers-FICCI report.
On the supply front, 6.9 million square feet (644,000 square meters) of new commercial offices was recorded in Q1 2021, a decline of 48.1% YOY. Colliers believes that demand in 2021 will be driven by mainly technology (IT-BPM), and engineering & manufacturing sectors.
“We believe demand in 2021 to be driven by mainly technology (IT-BPM), and engineering & manufacturing sectors. With demand likely to increase substantially for services in artificial intelligence, machine learning and robotics, we believe that technology companies will expand their office portfolio over the next three years as Indian talent is being considered favourably for high-end R&D activities”, said Arpit Mehrotra, Managing Director, Office Services (South India) at Colliers.
The net office absorption in 2020 across the top six Indian was 20.6 million square feet (1.9 million square meters), a decline of 42.8% YoY. Technology firms remained the major demand drivers, with about 45% of the demand from large occupiers in recently completed projects offering better wellness and hygiene standards.
Flexible workspace operators to lease about 3 million square feet in 2021. As of the end of February 2021, the total flexible workspace stock stood at 30 million square feet (2.8 million square meters), across the top six Indian cities out of which Bengaluru, Hyderabad and Mumbai accounted for the bulk. During 2021.
However, in 2022, they expect a pick-up in demand for well-located, high quality and efficient flexible workspaces, resulting in their occupying 5.4% of the total commercial office portfolio in India.
During 2020, institutional investments in the real estate sector was recorded at $4.8 bn despite a muted activity during Q2 2020. “Investors continue to be bullish on the Indian real estate sector and asset classes such as offices, data centres and warehouses are receiving increasing interest,” the report mentioned.
During 2020, 46% of the total inflows accounting to $ 2.2 billionwere in the office market, signifying investors’ unwavering confidence in the commercial office asset class despite India’s continuing work from home scenario.
