Bengaluru is likely to see large-sized deals above 100,000 square feet area, and it is expected to form a major portion of the projected leasing in 2021.
The city is to witness a 20-30 per cent increase in absorption, the supply is expected to be incremented by a Y-o-Y growth of 20-30 per cent, said Savills India in its recent report - India Market Watch Office 2020.
"The city (Bengaluru) is likely to take the lead with an estimated absorption of 14 million square feet by year-end as confidence among corporate occupiers in the city continues to remain strong. Additionally, the availability of a diverse talent pool and robust tech ecosystem puts the city ahead of others, the report said.
On the space absorption in the country, Savills India’s report said, “Office space absorption across India’s six major cities is expected to touch 41.3 million square feet in 2021, marking a growth of 22 per cent from last year.”
“We expect the office real estate market to improve in 2021 as it continues to attract interest from occupiers as well as investors, despite the disruption caused in 2020. Boosted by positive government reforms and improvement in economic activity, we are certain that office space absorption will pick up soon. Several corporate occupiers have revived their expansion plans as more and more people start returning to offices and business starts to pick up,” said Anurag Mathur, CEO, Savills India.
“2021 would be an interesting year for the office market. For cities like NCR and Mumbai, we expect it to be a year of recovery and regaining lost ground. Meanwhile, for tech cities like Bengaluru and Hyderabad, it will continue to be a year of expansion and growth,” said Naveen Nandwani, Managing Director, Commercial Advisory and Transactions, Savills India.
Mumbai
Meanwhile, Mumbai is likely to post the highest Y-o-Y growth in leasing activity from 2.9 million square feet in 2020 to 5.5 million square feet in 2021. The city could see an increase of about 85-90 per cent in office leasing as recovery is anticipated in the latter part of 2021. BFSI and technology occupiers are likely to drive the office demand. Savills India expects rentals to be mostly stable across most micro-markets.
Delhi NCR
The Delhi NCR market is likely to increase about 20-25 per cent in leasing in 2021, with most activity expected in the latter part of the year. Technology, BFSI, consulting, and manufacturing occupiers are likely to lead the demand. Delhi NCR has a strong pipeline of new supply of around 8.5 million square feet, of which over 65 per cent is likely to be completed in Gurugram and the remaining in Noida. As incremental supply is likely to outpace demand, vacancy levels are likely to inch northwards.
Hyderabad
The office market in Hyderabad is likely to see a 25-30 per cent increase in absorption in 2021.The IT sector is expected to continue to drive the leasing activity of the city. Rentals are likely to witness a marginal upward trend in 2021 as demand catches up with oversupply to a certain extent.
Chennai
Savills
India forecasts a Y-o-Y growth of 5-10 per cent in leasing activity in 2021 for the office market in Chennai. Rents in 2021 are likely to match or inch past the pre-Covid levels. Chennai is expected to witness approximately 5.6 million square feet of new completions, which translates to a 54 per cent higher supply as compared to 2020. Most of this upcoming supply is concentrated in Guindy and MPR.
Pune
The office market in Pune could see a 30- 40 per cent increase in absorption in 2021. Key locations like Baner and Belawadi in SBD West micro-market and Kharadi and Viman Nagar in SBD East micro-market are expected to continue to remain preferred corridors by occupiers. In terms of supply, the year is likely to see completions to the tune of 5.6 million square feet, a 300 per cent growth from 1.4 million square feet in 2020.