India’s gross office leasing drops 16.9% as second wave of COVID persists

But Hyderabad bucked the trend with office leasing doubling in Q2. 

According to a recent report by Cushman & Wakefield, market sentiments in India were dampened by the second wave with several occupiers adopting a cautious approach amidst prevailing business uncertainty. That said, a number of deals that were being negotiated in the previous quarters got closed, and faster vaccinations are helping corporates with better visibility on return-to-work timelines.  

Cushman & Wakefield analysed the performance of the Indian office markets, with the second quarter witnessing a slowdown in leasing activity due to the second wave that led to imposition of lockdown restrictions across top cities. 

Here’s more from Cushman & Wakefield:

Total pan India gross leasing was recorded at 9.9 msf, lower by 16.9% on q-o-q basis (growth of 55.1% y-o-y) with the second wave slowing down the robust growth momentum that was witnessed in Q1. Hyderabad, Delhi-NCR and Mumbai contributed significantly to leasing activities in the quarter with Hyderabad alone accounting for over a third of pan-India leasing, largely driven by the preleasing activity. 

Key Highlights

• 9.9 msf gross leasing volume in Top 8 cities in Q2 2021; a 16.9% decline q-o-q 
• Hyderabad was the leading market in terms of pan-India gross leasing volumes, accounting for a share of 33.6%, followed by Delhi-NCR (17.9%). Mumbai and Bengaluru had 14.7% and 10.7% shares, respectively. 
• In terms of tenant representation, Engineering & Manufacturing accounted for highest share (38.4%) in quarterly leasing followed by IT-BPM with a 21.5% share. Healthcare & Pharma and captives were the other major sectors contributing 9.8% and 5.8%, respectively 
• New completions were recorded at 8.0 msf in Q2 2021 with Mumbai witnessing the highest share of 33.5%. Supply recorded a 26.4% decline on a q-o-q basis largely due to limited activity during the second wave, though new completions recorded growth on an annualised basis. Construction activity came under essential infrastructure services and was permitted to continue during the second wave. 
• The net absorption in Q2 2021 stood at 4.26 msf, a 28% growth on a quarterly basis 

Get the full report here.