The IT sector continued to rule the Indian workplace space absorption in 2020 with the service centric cities — Bengaluru, Hyderabad and Chennai — alone accounting for just about 60% of the total 27.4 million sq ft (MSF) of space leased by corporates.
Property consulting firm Savills India mentioned workplace space absorption across India’s top rated six cities fell 51% Y-o-Y in 2020 from a record higher of 55.7 MSF a year-ago. For comparison sake, in 2018 calendar year, corporates leased 47.3 MSF of space.
Bengaluru reported the maximum workplace space absorption with 6.8 MSF in 2020. Despite a drop of 56% Y-o-Y, the city led general leasing across the top rated six cities, followed closely by Hyderabad, which leased 5.4 MSF of space, Savills India mentioned.
Hyderabad took more than the national capital area (NCR), which settled at the third spot. Delhi NCR reported about 4.4 MSF of workplace space absorption in 2020. Like in the preceding year, the top rated 3 cities of Bengaluru, Hyderabad and NCR constitute about 61% of the total leasing activity in 2020.
The country’s monetary capital, Mumbai recorded about 2.9 MSF leasing in 2020 — the least absorption witnessed amongst the six cities, even though Chennai witnessed an annual decline of just under 29%.
Sector-sensible, IT remained the top rated workplace space occupier accounting for 51.7% of total leasing in 2020 compared to 46.3% in 2019. Banking, monetary services and insurance coverage (BFSI) sector’s share in 2020 was greater at 14.3% compared to 10.6% final year.
However, it was the sectors of engineering and manufacturing, as properly as transport and logistics, which doubled their respective shares in 2020 compared to 2019. They accounted for 7.8% and 3% share in 2020, respectively. On the other hand, co-working segment’s share declined to 8.5% in 2020 from 14% in 2019 as a outcome of occupiers broadly adopting work from residence (WFH) policy.
The year 2020 witnessed a 35% Y-o-Y decline in new completions, with Delhi NCR, Pune and Mumbai seeing a drop of 60%. Bengaluru and Hyderabad saw somewhat lesser decline of 14% and 21%, respectively. Interestingly, Chennai maintained a equivalent level of completions at about 3.6 MSF in 2020.
Bengaluru, Hyderabad and NCR collectively comprised 80% of new completions as most provide that had come was committed in preceding years. Overall vacancy levels rose marginally to 11.7% in 2020 – on a pan-India typical – as new provide exceeded the pace of leasing.
Going ahead, Savills India CEO Anurag Mathur mentioned, “The fundamentals of Indian economy remain intact and we continue to witness strong leasing traction in sectors like warehousing and industrial. Now with a vaccine in sight and businesses poised to gain momentum, we can expect to reach pre Covid-19 levels soon.”