Bengaluru, Hyderabad, Chennai account for 59% of total office leasing demand across 7 cities

South Indian cities Bengaluru, Chennai and Hyderabad dominated office demand, contributing 59 per cent of total office leasing across the top seven cities during the quarter ended June, according to real estate consultant Vestian.

South Indian cities Bengaluru, Chennai and Hyderabad dominated office demand, contributing 59 per cent of total office leasing across the top seven cities during the quarter ended June, according to real estate consultant Vestian.

As per the data, the combined office space leased in the three southern cities stood at 8.2 million square feet. This was out of the total of 13.9 million square feet absorbed in the April-June quarter, Vestian said in its quarterly office market report, ‘The Connect Q2 2023’.

The technology sector dominated leasing activity, followed by engineering and manufacturing, while flexible spaces also gained traction due to cautious leasing decisions amidst market uncertainty, it noted.

Across seven major cities, office leasing fell 6 percent to 13.9 million square feet during the April-June quarter as against 14.8 million square feet in the year-ago period due to delays in decision-making by large domestic firms and multinational companies amid global uncertainties.

However, demand was up 17 per cent compared with the previous quarter.

As per the April-June data, Chennai saw leasing surge 83 percent to 2.2 million square feet from 1.2 million square feet in April-June 2022.

Leasing in Bengaluru decreased 12 per cent to 3.7 million square feet from 4.2 million square feet. Hyderabad witnessed a marginal fall of 4 per cent to 2.3 million square feet from 2.4 million square feet.

Leasing in Mumbai fell 25 per cent to 1.8 million square feet from 2.4 million square feet. But in Pune, demand rose 6 per cent to 1.8 million square feet from 1.7 million square feet. Office leasing in Delhi-NCR remained subdued and fell 5 per cent to 2 million square feet from 2.1 million square feet.

Commenting on the findings, Vestian CEO Shrinivas Rao said, “Despite global headwinds, the Indian economy has performed well. India's GDP growth rate showed improvement in the last quarter of FY23. Financial markets also performed well, reflecting positive sentiment in the country."

"Hiring intentions for Q3 2023 improved, indicating optimism about India's growth prospects. The resilience of the Indian economy was reflected in the Indian office market as well, with increased absorption and a fading impact of funding challenges," he added.

Rao noted that absorption and new completions increased significantly during the June quarter as compared to the previous quarter.

“As global markets stabilise, the second half of the year is expected to see increased real estate activities across the country,” he noted.