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Office space leasing hits record 31.8 mn sq ft in H1; attracts USD 1.5 bn capital: CBRE

New Delhi: Office space leasing increased by 36 per cent to a record 31.8 million sq ft in the first six months of this year across nine major cities on strong demand from corporates, helping this segment to attract USD 1.5 billion capital, property consultant CBRE said.

The office space leasing stood at 23.3 million sq ft during January-June 2018 in nine cities — Delhi-NCR, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad, Pune, Kochi and Ahmedabad.

“Leasing activity rose by almost 40 per cent as compared to H1 2018, crossing 30 million sq ft during the first half of 2019; a historic high, indicative of the fact that leasing activity could surpass the previous peak of 2018,” CBRE said in its latest India Office Market View report.

The consultant forecast that leasing could rise by 5-10 per cent in 2019 from record 48.2 million sq ft achieved during the last year.

Strong demand for office space and sustained rental growth continues to attract both institutional investors and developers, as more than USD 1.5 billion worth of capital was deployed in this sector in H1 2019, both in core built-up assets as well as land parcels, the report said.

“Increasingly, a larger number of global and domestic firms are positioning India as the destination for higher skilled requirements, either for their global operations (through global in-house centers – GICs) or for tech-driven services, rather than low-end processes.

“As a result, we anticipate that the share of tech corporates in overall office space take-up would remain strong in 2019, a trend already visible in the first half of the year,” said Anshuman Magazine, Chairman and CEO, South East Asia, Middle East and Africa, CBRE.

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According to the data, Bengaluru, Hyderabad, NCR and Mumbai accounted for about 80 per cent leasing of office space during the first six half of this calendar year.

Office space leasing in Bengaluru rose to 9.5 million sq ft in January-June 2019 from 8.3 million sq ft in the corresponding period of last year.

Hyderabad witnessed a sharp jump in leasing activities to 7.1 million sq ft from 3 million sq ft.

NCR saw marginal increase to 4.6 million sq ft from 4.3 million sq ft, while office space leasing in Mumbai rose to 4 million sq ft from 3 million sq ft.

Office space leasing in Chennai went up to 2.6 million sq ft from 2.2 million sq ft.

Pune reported 2.7 million sq ft of leasing as against 2.1 million sq ft, while Ahmedabad registered 0.7 million sq ft against 0.1 million sq ft. Kochi, too, saw an increase in leasing numbers to 0.3 million sq ft from 0.1 million sq ft.

Office space leasing in Kolkata was flat at 0.2 million sq ft during January-June 2019, the data showed.

On the outlook for this year, CBRE said that the impact of technology disruptive changes will be clearly visible.

Office leasing activity is expected to strengthen in the short term, backed by corporates seeking to expand or consolidate their operations. Besides American entities, India’s position as a preferred outsourcing destination would continue attracting corporates from other geographies such as Europe, Middle East and Africa (EMEA) and Asia-Pacific (APAC).

Banking, financial services and insurance (BFSI), engineering and manufacturing, research and consulting, and flexible space corporates are also likely to account for a larger share in annual leasing activity. Pharmaceuticals, telecom and e-commerce are also likely to report higher occupier demand, driving demand for commercial space.

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