Cumulative net absorption of office space is expected to cross 100 million sq ft by end of 2020 in the top eight Indian cities as the absorption is expected to grow at approximately at a CAGR of 8% over 2017.
A report by JLL India said office space market has been experiencing robust demand trends which will be fructified in the next 2 -3 years keeping the office leasing activities buoyant and in an upward movement.
Net absorption for 2018 is expected to be at 30.2 million sq ft to record a positive growth over 2017. Though the percentage increase will be moderate at about 5%, the next two years will see healthy increase in net absorption of Grade A office spaces at average of 10% year-on-year giving the office absorption market a stable momentum, JLL India said.
These eight property markets include Mumbai, Delhi-National Capital Region, Bangalore, Chennai, Hyderabad, Pune, Ahmedabad and Kolkata.
“The office space absorption growth is directly dependent and indicative of economic factors like the growth in GDP, access to institutional capital and stability in the market.”
It said India is on a steady rise on global charts as a business location. Demand is expected to come both from domestic as well as global companies in India. Our estimates of growth sectors impacting the office absorption for the next three years are IT/ITeS, e-Commerce and related businesses, BFSI and FinTech companies and business consulting and services firms,” said Ramesh Nair, CEO & Country Head, JLL India.
The estimated net absorption for office space in the various cities for 2018 would be strong with Bangalore expecting around 7-9 million sq ft of net absorption leading the volumes. Mumbai is estimated to see 6-7 million sq ft of net leasing activities in 2018. Chennai, Hyderabad and Pune will remain in the range of 4-5 million sq ft each in this year, while Kolkata could see anywhere between 1 -2 million sq ft of office space absorption in 2018.