Office leasing witness a 3 fold jump in Q2 2022

Hyderabad Office gross absorption saw a three-fold rise to 14.7 million sft across the top six cities during Q2 2022 as compared to the same period last year. The strong streak seen at the beginning of the year continued in the second quarter unabated, rising 14 per cent QoQ. In terms of new supply, the quarter saw a two-fold increase from Q2 2021 with an addition of 9.4 million sft, Hyderabad grabbed the highest share of 40 per cent in total supply during the quarter.

Ramesh Nair, CEO (India) and MD (Market Development, Asia), Colliers, said: "The quarter saw increased office occupancy after a hiatus, as demand outpaced supply by a significant margin. Absorption in the first two quarters of the year has already surpassed more than 80 per cent of the total absorption seen in the whole of 2021. Clearly, office demand is well headed to close at 40-45 million sq feet by the end of this year. Resultantly, rentals are also likely to firm up in next two quarters as the occupancy levels rise."

Vimal Nadar, Senior Director and Head of Research, Colliers India, said: "Inflation levels in the country have consistently breached the 6 per cent threshold in the past 2-3 months. Further, developers are facing the brunt of the rising cost of construction which has affected the new project completions during the quarter. Consequently, we might see 10-15 per cent of the planned project completions being pushed to subsequent quarters as developers are likely to take a cautious approach to tide through these challenges despite rising demand."

Led by rising demand paired with a steady influx of quality supply, overall vacancy rates declined by 100 basis points during Q2 2022 at 17 per cent. This trend reversal has come after a long haul of nearly 10 quarters since the onset of the pandemic. All the major markets saw strong leasing activity during the quarter, driven by high occupier demand for large office spaces. Bengaluru led the leasing at 30 per cent share, while Mumbai and Delhi-NCR accounted for 19 per cent and 18 per cent share respectively. Pan-India absorption has already surpassed 27 million sft in the first half of the year, signaling a strong revival in occupier demand. In terms of new supply, the quarter saw a 34 per cent decline on a sequential basis, there is a healthy pipeline of quality assets due for completion during the second half of the year. The top six cities considered for the Q2 2022 are Bengaluru, Chennai, Delhi NCR, Hyderabad, Mumbai and Pune.