India finally recovers from record low office completions

Nearly 12m sq ft of new office projects were completed in Q2.

At 11.9 msf in Q2, new office completions in India posted a strong recovery from the levels seen in the previous quarter, when supply was the lowest in the last 13 quarters. 

According to Cushman and Wakefield, new supply grew by 71% on a qoq basis and was higher by around 1% as compared to the same period last year. Some projects for which OCs were delayed previously have entered the market in this quarter. 

Here’s more from Cushman and Wakefield:

Developers have also been adding speculative supply given that demand was observed to be steadily recovering and also because the Indian office market performed much better as compared to some other markets, particularly in the US and Europe. 

Over the past several quarters, supply has been moving broadly in line with demand across major cities and developers have recognized the need to be prepared with Grade A supply as and when demand picks up further. However, certain micromarkets have seen a glut of supply which could result in further rise in vacancies in the near term. 

Pan India average rentals have remained stable with only Delhi NCR witnessing an uptick in rentals in Q2 on the back of strong demand. Occupier friendly conditions prevails in key markets given the healthy supply addition and developers/landlords looking to attract/retain tenants. 

However, certain prime micromarkets or properties with tight vacancies could witness a gradual rise in rentals in the next 12 months. Hyderabad was the top market in Q2, accounting for ~46% of new completions, followed by Bengaluru (22%) and Chennai (18%).