India’s office transactions recorded a strong quarterly growth at 12.5 million sq ft, up 168% on-year despite a more severe second wave of covid infections and the looming threat of a third wave, showed the Knight Frank data.
According to analysts, the total office transactions of the eight India markets during the quarter have improved and reached 83% of the 2019 quarterly average level.
Among the larger markets, Chennai, Bengaluru, and National Capital Region (NCR) recovered in the September quarter with transactions reaching the level of 123%, 112% and 93% respectively of the quarterly average of the year 2019.
The Information Technology sector was the largest consumer of space during the quarter and took up 34% of the space transacted. The heightened transaction activity from this sector is an encouraging driver for office demand as it is the most prolific occupier category in the office market. Occupiers also took up nearly 23,500 coworking seats across the eight markets during the quarter, the highest this year.
New completions of office projects also picked up significantly with 11.9 million sq ft delivered during the quarter, a 67% on-year growth. Bengaluru, Pune and Hyderabad accounted for 73% of the new completions with Bengaluru witnessing the most space delivered at 4 million sq ft.
The fourth quarter of 2021 is expected to see heightened traction as seen in 2020, if infection levels continue to remain low and vaccination targets are achieved. In terms of pricing and rentals, the market is heading towards stability in both residential and commercial segments.
In the office market, NCR was the only market that experienced rental growth during the quarter. However, that was also restricted to 1%. Landlords’ strategy of offering relaxed lease terms is reflected in the fall in rentals on a year-on-year basis across most markets. However, the fall in rentals has reduced in the last few months.
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