India’s new office supply declines 9% to 10.7msf in Q3

This brings the total completions to 29.5msf year-to-date.

At 10.7 msf, new office completions in India recorded a decline of 9% q-o-q while it posted a 31% drop on a y-o-y basis, according to data from Cushman and Wakefield. YTD-23 new completions now stand at 29.5 msf as against the same period last year when 42.5 msf of new supply had hit the market. With large-sized deals taking more time to conclude, developers may have been going slow on completions. 

Here’s more from Cushman and Wakefield:

Consequently, some of the supply which was anticipated to come earlier this year has been pushed for later quarters across multiple cities. Projects with better preleasing would be fast-tracked while the speculative supply may see slower progress if the on-going macroeconomic uncertainty persists for some more time.

Close to 3.2 msf of new supply happened in Bengaluru, which accounted for a dominant 30% of all supply pan-India during the quarter. This was followed by Hyderabad with 2.2 msf of new supply that hit the market in Q3, accounting for 21% share. Pune and Chennai were other large contributors to new supply in Q3 with shares of 15% and 13%, respectively. 

Going forward, the supply pipeline remains strong in India across many cities, particularly in the leading IT cities of Bengaluru and Hyderabad. The good part is that bulk of the new supply is concentrated around the top-2 prime submarkets across cities, where vacancy levels are high and occupier as well as investor interest levels are high. 

A healthy supply pipeline is likely to ensure rents remain range-bound across most micro-markets, while select locations and projects where vacancies are very tight could see upward pressure on rents. For instance, micromarkets such as BKC, ORR, Guindy, Madhapur and Viman Nagar are prime markets in their respective cities and there is a tight vacancy that prevails here.