Office rentals remained stable across the major office markets in India in Q2 2021.
Gross leasing across top eight cities stood at 9.9 msf in Q2 2021, a 55 percent increase in gross leasing as compared to 6.39 msf gross leasing in Q2 2020, a report by Cushman & Wakefield has said.
Hyderabad, Delhi-NCR and Mumbai emerged as the most active office leasing markets in the quarter. Hyderabad recorded a 2X growth in gross leasing, both on quarter-on-quarter (QoQ) and year-on-year (YoY) basis with the highest pre-commitments since Q3 2020 and major transaction closures, it said.
Delhi NCR’s gross leasing was 13.5 percent lower on a quarterly basis but more than double that of the leasing volume during the same period last year, the report said.
Market activity was driven by pre-commitments and term renewals even as fresh leasing remained relatively muted.
For Mumbai, the gross leasing volume stood at 1.45 msf during Q2 2021, a 51 percent decline QoQ with rising Covid-19 cases since the end of the first quarter and subsequent lockdown affecting leasing activity.
Q2 2020 was more like a knee jerk reaction where the entire country was under lockdown and there was limited knowledge of the pandemic and wider apprehensions. But, by Q2 2021, occupiers/companies were better prepared and had far more information on the pandemic, said the report titled Cushman & Wakefield’s Q2 Office Report.
The report also points at a robust growth momentum of flexible workspaces. In the previous quarter, Cushman & Wakefield reported a 57.8 percent increase in the number of flex seats (leased by enterprise clients) in Q1 2021, compared to Q4 2020. In H1, the number of flex seats leased reached an impressive 31,538; which is nearly 87 percent of the seats leased during the whole of 2020 (36,255).
Based on the result seen, it is likely that the number for the current year could exceed 50,000 seats. This sharp jump is observed mostly due to the preference of enterprises to enjoy the benefits of flexibility and cost optimization that flex spaces offer, the report said.
Pan India net absorption stood at 4.26 msf in Q2 2021, a 28 percent QoQ growth largely due to projects with pre-commitments becoming operational during the quarter. This was witnessed in Bengaluru, Mumbai and Hyderabad which accounted for 34.8 percent, 24.1 percent and 23.4 percent of quarterly net absorption respectively
"The COVID-19 second wave was devastating in so many ways, but clearly the resilience shown by the sector, despite the tough times, is nothing short of being phenomenal. From here, with COVID19 inoculation program getting the necessary impetus from government and corporates, I am confident that the second half of the year will have a strong upward trajectory,” said Anshul Jain, Managing Director – SE Asia & India.