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Gross office leasing across India's eight largest property markets declined 1% year-on-year to around 21 million sq ft during the April–June quarter, according to Cushman & Wakefield. Net absorption fell 14.5% to 11.6 million sq ft as limited availability of premium office space constrained occupier expansion despite sustained demand. The consultancy attributed the moderation primarily to supply-side constraints rather than weakening market fundamentals. Global Capability Centres (GCCs) continued to drive leasing activity, while tightening vacancy levels and improving rentals are expected to encourage developers to increase commercial project launches after a period of stronger focus on residential developments.
Gross leasing of office space across India's eight major property markets declined by 1% year-on-year to around 21 million sq ft during the April–June quarter, while net absorption fell 14.5% to 11.6 million sq ft, according to the latest office market report released by Cushman & Wakefield.
The report covers the office markets of Mumbai, Delhi-NCR, Bengaluru, Pune, Hyderabad, Chennai, Ahmedabad and Kolkata. According to the consultant, the decline in net absorption was primarily driven by the limited availability of prime office space across key commercial markets rather than a slowdown in occupier demand.
Gross leasing, which measures overall leasing activity, includes fresh leases, renewals and pre-leasing transactions, providing an indication of total market activity. Net absorption, on the other hand, measures the change in occupied office stock between two reporting periods and reflects the net increase in occupied workspace.
Cushman & Wakefield stated that constrained supply of high-quality office space affected leasing volumes during the quarter, particularly in established business districts where vacancy levels have continued to tighten.
Anshul Jain, Chief Executive – India, South-East Asia, Middle East, Africa and Asia-Pacific Office and Retail at Cushman & Wakefield, said global macroeconomic and geopolitical uncertainties had resulted in occupiers adopting a more measured approach to leasing decisions. However, he noted that underlying demand for office space in India remained resilient.
He added that multinational companies continue to make long-term commitments to the Indian market, supported by the country's skilled talent pool, business environment and long-term economic growth prospects. According to Jain, Global Capability Centres (GCCs) remain a major source of office demand and continue to influence leasing activity across several commercial markets.
On the supply side, the consultancy observed that many developers had prioritised residential developments over the past two years amid sustained demand in the housing sector. As a result, the pace of new commercial office supply remained relatively constrained.
Jain said that tightening office vacancies, strengthening rental values and continued occupier demand are expected to encourage developers to increase their focus on commercial real estate. He added that a stronger pipeline of new office developments would be necessary to support the next phase of growth in India's commercial office market.
The report indicates that while leasing activity moderated during the quarter due to limited availability of premium office assets, occupier interest, particularly from GCCs and multinational corporations, continues to underpin demand across India's leading office markets. Supply additions over the coming quarters are expected to play an important role in determining future leasing momentum as businesses continue to expand their office footprints.
Source - PTI
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