Indian Office Space Market Hits Record Transaction Volumes Of 46.8MSF In 2018

Indian office space market has achieved record transaction level in 2018 growing 12 per cent year-on-year (YoY) last year saw the highest level of transaction volumes of 46.8 msf.

The 46.8 msf transaction volume was, in fact, the highest space transacted ever in the Indian office space market in any single year, said Knight Frank India in a report on Tuesday (8).

Knight Frank India report, ‘India Real Estate’ which presents a comprehensive analysis of the residential (across eight cities) and office (across seven cities) market performance in the country states that 2018 as the best performing year historically for the commercial office segment with leasing crossing 46 million square feet (msf).

Bengaluru continued to lead the office space market recording the highest leasing volumes at 13.4 msf. Office space supply in the city was recorded at 7.6 msf in 2018.

Hyderabad saw the highest percentage increase in space transacted YoY in the second half of 2018 at 30 per cent.

Except for Ahmedabad (-29 per cent) and Chennai (-23 per cent), leasing activities saw a positive growth trend in leasing in full-year 2018 compared to 2017.

Pune recorded the highest percentage growth at 46 per cent YoY in 2018, but the significant jump in leasing volumes was in Hyderabad which, while recording a yearly increase of 24 per cent in 2018, saw leasing worth seven msf. This volume is significantly closer to those in large markets such as the national capital region and Mumbai.

Supply of new office spaces saw a commensurate increase to leasing volumes recording an increase of 13 per cent in full-year 2018 when compared to 2017.

The total supply for 2017 was recorded at 36.9 msf.

Pune (229 per cent) and NCR (86 per cent) saw maximum new completions during 2018.

Mumbai (-37 per cent) and Chennai (-28 per cent) saw a decline. The decline in fresh supply in Chennai has also impacted level leasing activities

The vacancy has seen a marginal improvement in the last year settling at approximately 12 per cent at the end of 2018, with southern cities of Bengaluru (four per cent), Hyderabad (seven per cent), Chennai (11 per cent) keeping the vacancies low. Pune also recorded a low vacancy (eight per cent).

Leasing by co-working spaces saw a significant rise of 52 per cent YoY in H2 2018 (Jun-Dec) as compared to same time 2017. BFSI, led mostly by payment gateway companies, formed 18 per cent of all leasing transactions in the second half of 2018.

The latest data shows firm economic activity in 2018. The year 2019 is expected to witness undercurrents of several geopolitical events and resultant economic developments that may impact India’s office markets and businesses, the report said.