India’s Grade A office market across the top seven cities is poised to grow to over 1 billion sq. ft in size by 2026 and touch 1.2 billion sq ft by 2030. The flexible space market is also expected to double its footprint across the top seven cities by 2025 to around 75 million sq ft and cross the 100 million sq ft mark by 2030, a JLL paper titled Reimagining, Reinventing and Redefining Real Estate 2030 has said.
It was released on April 28 at the National Real Estate Development Council (NAREDCO), Maharashtra’s flagship event, The Real Estate Forum 2022 where JLL is associated as a Knowledge Partner.
The office segment in India has been one of the fastest to recover from the impact of the pandemic. The recovery has been so phenomenal that India’s Grade A office market across the top seven cities is poised to grow to over 1 billion sq ft in size by 2026, the paper said.
In the post-Covid world, the flex space segment is expected to grow and be a mainstream occupier segment with operator-landlord partnerships creating superior office assets. As a result of the evolution to a more distributed work model, occupiers will look at strategies to not only make their portfolio more agile but also tap into the talent pool from emerging urban centres.
The flexible space segment will play a key role in supporting occupiers’ growth strategies given the changing dynamics of portfolio optimization and employee needs. As such, the flex market is expected to double its footprint across the top seven cities by 2025 to around 75 million sq ft and cross the 100 million sq ft mark by 2030.
“India will continue to remain the leader in technology outsourcing and will build on its gains as the biggest R&D and Global Capability Centre hub across financial services, software development, new technology, artificial intelligence and machine learning. Also, with the country’s renewed focus on making itself a manufacturing hub, engineering and manufacturing firms will set up large R&D centres here, making its office market the most dynamic in the region. India may potentially account for over 2/3rds of all occupier activity in the Asia Pacific region,” said Karan Singh Sodi, Regional Managing Director, Mumbai and Ahmedabad, JLL.
“One of the highlights of the post COVID-19 world has been the recovery of the office segment and this segment is expected to grow to over 1 billion sq ft in size by 2026 across seven cities which includes Delhi, Mumbai, Pune, Chennai, Kolkata, Bangalore and Hyderabad. It’s an interesting development which we believe is an apt topic to focus on at the NAREDCO Maharashtra flagship event The Real Estate Forum 2022,” said Sandeep Runwal, President, NAREDCO Maharashtra and MD, Runwal Developers.
Sustainability is the key to the future
India’s commercial Grade A office stock across the top seven cities has a 42 percent green-certification penetration. The penetration of green-certified buildings is likely to cross the 50 percent mark overall over the next decade.
In fact, new supply is likely to be green rated to an extent of 70-75 percent even as older projects look to upgrade and reduce their carbon footprint. With occupiers driving the green agenda and willing to pay a premium for such green buildings, affirmative action on net zero carbon pledges by occupiers will push the commercial office segment towards setting aggressive sustainability and net-zero carbon targets, the JLL paper said.
India’s listed REITs will be one of the leading markets in the Asia Pacific.The market capitalisation of listed REITs which stood at $8 billion currently is expected to grow manifold with the specialised REITs market developing in the next few years. This will also lead to increased retail participation. Consolidation of rent yielding assets across segments Institutional investments in rent yielding assets across segments will increase leading to higher consolidation of assets. Portfolio deals will become prominent, it said.