Bangalore is zipping up fast to match with Beijing in terms of demand for office space.
A study by Cushman & Wakefield, CATCH 22 Asia Pacific Commercial Real Estate Outlook 2022, pegs the demand for office space to reach 8 million square feet in Bengalore, making it equal to Beijing. Tech city Hyderabad will be a close contender with 7 million sq ft of demand by 2022, it said.
Pent-up leasing needs resulted in heightened demand amid a sluggish supply in 2021. Office demand is expected to be at pre-pandemic levels in 2022, strongly led by the financial and tech sectors. Restricted construction activity, however, will throw up challenges for both occupiers and investors, the report said.
India’s biggest cities, especially the tech cities, are forecast to experience increased demand as a result of delayed decision making in 2021, it said.
With a 9 percent growth rate, India is expected to lead the Asia Pacific economy into a growth phase in 2022, surpassing Japan, South Korea, Singapore and Australia.
“We expect 2022 to be the year of growth and resurgence that will be led by the high office demand across Asia Pacific. Momentum around e-commerce, logistics, data centres and sustainability will add tailwinds to this growth,” said Anshul Jain, Managing Director, India and South East Asia.
As economies reopen and employees start their return to the office, it is important to note that while there is generally a universal desire to work with greater flexibility after the pandemic, significant variations exist across the Asia Pacific region.
Employees in India and China show desire to work frequently in office –more than two days per week. India at 72 percent is 12 percentage points above the Asia Pacific average and 45 percentage points above the US, the study said. “In 2022, India is bound to get the front seat in APAC real estate growth, ahead of China and Australia, driven by strong office demand,” said Badal Yagnik, Managing Director, Tenant Representation, India.
With demand rebounding and comparatively muted supply, rents are now forecast to reach a trough in late 2021 through to early 2022, approximately 12 months earlier than predicted. Singapore, Seoul, Bengaluru and Pune have the strongest rent growth outlook, it noted.
As for investments, while this market has not been immune to the negative impacts of the pandemic, it has also been comparatively quick to rebound. Given the outlook, and trends to date, total regional investment volume in 2022 is expected to remain at the 2019 peak of around $180 billion. The investment market in India continues to grow and mature with the REIT market now owning 10 percent of Grade A stock. These growth trajectories are expected to continue into 2022, the report added.