Office space leasing across India's six major cities rose by 22 per cent to record 57.7 million sq ft (gross) during 2019 on strong demand for worskspace from corporates, especially Americans, but pace of growth is likely to moderate to 7-8 per cent this year, according to global property consultant Savills.
UK-based Savills, which is listed on London Stock Exchange and has 600 offices across 70 countries in the world with over 39,000 employees, has pegged the gross office leasing at 61-62 million sq ft in 2020 across six cities -- Bengaluru, Chennai, Hyderabad, Mumbai, National Capital Region (NCR) and Pune.
"The commercial segment, especially, the office space market is going from strength to strength, beating its own record of 47.3 million sq ft in 2018 to set a new one at 57.7 million sq ft in 2019," Savills India CEO Anurag Mathur told reporters here.
This growth symbolises that office space across key markets is on a strong footing, driven by India's technology sector, rise in flexible spaces, formalisation of the Indian economy and the growing offshoring by western corporations, he added.
Of the total leasing, 40 per cent absorption was from US corporations, 30 per cent from European companies and 30 per cent from domestic entities.
Asked about 2020 outlook, Mathur said the gross office space leasing is estimated at around 61-62 million sq ft.
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"Growth will happen. It may not happen at the same rate as 2019," he said, adding that the demand was exceptional last year.
Shweta Sawhney, MD (Delhi-NCR), said Hyderabad saw an increase of 53 per cent in office space leasing at 9.5 million sq ft in 2019. Chennai reported 60 per cent rise in absorption of office space at 8 million sq ft.
Office space leasing rose by 15 per cent in Bengaluru at 15.6 million sq ft, while Delhi-NCR witnessed 14 per cent growth at 10.89 million sq ft.
In Mumbai, the gross leasing of office space grew by 11 per cent to 6.9 million sq ft. The absorption was stable in Pune at 6.8 million sq ft.
On rentals, Sawhney said office space rent grew maximum by 18-20 per cent in Chennai. Bengaluru saw a rise of 7-10 per cent in rental, Hyderabad 8-10 per cent, Mumbai 4-5 per cent, Pune 2-4 per cent, Gurugram 3-4 per cent and Noida 0-2 per cent. In Delhi, rentals were stable.
Major demand generators for Grade-A office spaces on pan-India scale were technology sector companies at 46.3 per cent. Banking, financial services and insurance (BFSI) leased about 10.6 per cent of the overall space and co-working segment has 14 per cent share.