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Hyderabad Overtakes Bangalore In Total Office Leasing In Q1 2019 To Be The Dominant Market In India

  • Gross leasing touched 12.8 million sq. ft. in Q1 2019, recording a growth of 3 percent on a quarterly basis
  • Hyderabad, Bangalore, Mumbai and Delhi-NCR accounted for more than 75% of the leasing activity
  • Tech corporates continued to drive office space take-up in the country leasing about 33% in Q1 2019
  • Supply addition in Q1 2019 rose by 23% on a quarterly basis to touch 13.4 million sq. ft

New Delhi, 17 April 2019: CBRE South Asia Pvt. Ltd, India’s leading real estate consulting firm today announced the findings of its latest India Office MarketView – Q1 2019 report.  As per the findings of report, Hyderabad overtook Bangalore for the first time to be the dominant office market driving quarterly space take-up, on the back of culmination of several pre-commitments. Moreover, in the first quarter of 2019, gross leasing touched 12.8 million sq. ft., recording a growth of 3% on a quarterly basis with Hyderabad, Bangalore, Mumbai and Delhi-NCR accounting for more than 75% of the leasing activity.

Anshuman Magazine, Chairman & CEO, South East Asia, Middle East and Africa, CBRE, said:

 “Office leasing activity is expected to remain stable in the short term, backed by corporates looking to expand or consolidate their operations. While interest from American corporates is expected to sustain, we anticipate that India’s position as a preferred outsourcing destination would continue to attract corporates from other geographies such as EMEA and APAC.  Moreover, policy initiatives such as Make in India, Digital India etc., along with the emphasis on smart cities and industrial corridors, will likely boost operations of both Indian and multinational corporates.”


Small (less than 10,000 sq. ft.)  and medium-sized transactions (ranging between 10,000 sq. ft. and 50,000 sq. ft.) dominated space take up accounted for 33% and 48% of the transaction activity respectively. The share of large-sized deals (greater than 100,000 sq. ft.) increased from 7% in Q4 2018 to 10% during this quarter.

Hyderabad followed by Bangalore, dominated large-sized deal closures in Q1 2019, while a few such deals were also reported in Mumbai, Noida and Chennai. Tech corporates and flexible space operators mainly dominated large-scale deal closures. A few large-sized deals were also closed by e-commerce, BFSI, engineering & manufacturing and research, consulting & analysis companies.



Tech corporates continued to drive office space take-up in the country, with their share in total leasing rising from 22% in Q1 2018 to 33% in Q1 2019. Meanwhile, the share of key flexible space operators rose from 5% to 16% during the same time period. Other sectors such as engineering & manufacturing (10%), BFSI (9%) and research, consulting & analytics (7%) also contributed to the leasing activity in Q1 2019.

Ram Chandnani, Managing Director, Advisory & Transaction Services, India, CBRE South Asia Pvt. Ltd. said: “Bolstered by several policy initiatives to ease out liquidity pressures and promote construction activity and the listing of India’s first Real Estate Investment Trust (REIT), the real estate services (along with financial and professional services) grew at 7.3% during the review period.”  He further added, “Going forward, the focus on providing ‘smarter’ space solutions, mainly by leveraging technology across all aspects of a development and a shift from just LEED certifications to delivery of International WELL Building Institute’s (IWBI) WELL Building StandardTM (WELL) certifications would redefine the office space segment,”.


Driven by tech, BFSI and e-commerce firms, quarterly pre-leasing activity rose marginally on an annual basis, largely led by Pune, Bangalore, Chennai and Hyderabad.


Supply addition in Q1 2019 rose by 23% on a quarterly basis to touch 13.4 million sq. ft. Hyderabad, Bangalore, Delhi-NCR and Mumbai accounted for about 80% of the quarterly supply addition. Ahmedabad, Chennai, Hyderabad and Bangalore reported a rise in development completions on a quarterly basis. SEZs continued to account for a third of the quarter’s supply, rising by almost 40% as compared to Q1 2018. Almost the entire SEZ supply in Hyderabad, in particular, was pre-committed as developers refrained from investing in speculative development in this segment.



  • Sustained occupier interest resulted in Noida Expressway, Peripheral Noida and Udyog Vihar, Gurgaon dominating the region’s leasing activity
  • Majority of the deals were closed in secondary spaces
  • The region witnessed supply addition in the form of two medium-sized non-IT developments on NH-8 in Gurgaon and in Main Noida and two medium-sized IT developments in Peripheral Noida and in Extended Golf Course Road in Gurgaon
  • Tech companies dominated leasing activity, followed by occupiers from e-commerce and engineering & manufacturing sectors, along with flexible space operators
  • Rental growth of about 2-4% q-o-q was recorded in NH-8 in Gurgaon and Main Noida mainly due to occupier interest towards locating in select IT developments. Rental growth of about 2-4% q-o-q was also recorded in the SEZ segment in DLF Cybercity backed by sustained occupier interest


  • Bangalore continued to be favored by occupiers in Q1 2019
  • Supply addition was witnessed in the form of medium-to-large-sized non-SEZ and SEZ developments in Whitefield, Brookfield and Electronic City – Phase 1 in PBD and medium-sized non-SEZ developments on Brunton Road in CBD and Marathahalli-Sarjapur on ORR
  • Quarterly SEZ absorption increased due to primary leasing in recently completed buildings in NBD, ORR and PBD
  • Flexible space operators dominated leasing activity, followed by tech and pharmaceuticals companies
  • Limited availability of quality space led to an increase in rental values of about 1-3% q-o-q in NBD, EBD and ORR and about 4-6% q-o-q in PBD across non-SEZ buildings


  • Leasing activity increased on a quarterly basis
  • Non-IT developments in Western Suburbs 1 and Eastern Suburbs dominated leasing activity, followed by IT developments in Navi Mumbai
  • Majority of the city’s supply addition was due to the conversion of built-to-suit (BTS) /campus spaces into Multi-tenanted Buildings (MTB) across Navi Mumbai, BKC Periphery and Eastern Suburbs. Supply addition was also witnessed with the release of additional floors in a premium IT development in Central Mumbai 2
  • Small-to-medium-sized deals continued to dominate leasing activity, with a few large-sized deals (greater than 100,000 sq. ft.) also recorded across several micro-markets.
  • Leasing activity was primarily driven by BFSI firms, closely followed by tech along with media & marketing companies
  • Rental values remained stable across micro-markets during the review period


  • For the first time, Hyderabad led overall office leasing in the country
  • Supply addition witnessed in the form of one large-sized SEZ and two IT developments in Raidurg and Kondapur in IT Corridor II, one medium-sized SEZ in Kokapet in Extended IT Corridor and one medium-sized SEZ in PBD
  • Tech corporates continued to lead demand followed by engineering & manufacturing firms
  • Rents increased by about 2-5% and 3-6% q-o-q across all segments in IT Corridor II and Extended IT Corridor respectively owing to increased occupier interest towards recently completed developments


  • Leasing activity witnessed significant increase on a quarterly basis
  • Supply addition in the city consisted of a small-sized non-IT development in Adambakkam in OMR Zone 1, a small-sized IT development in Guindy in Off CBD and a medium-sized IT development in Ambattur
  • Tech corporates continued to lead demand, followed by flexible space operators and engineering & manufacturing firms
  • Rents increased by about 3-7% q-o-q in all micro-markets in the IT segment and by about 3-4% q-o-q in CBD and OMR Zone 1 in the non-IT segment owing to sustained demand  amidst limited supply addition in the recent few quarters


  • Supply addition was witnessed in the form of a small-sized IT development in Baner and a non-IT development in Viman Nagar in SBD
  • Tech firms continued to dominate space take-up, followed by flexible space operators and BFSI firms
  • Limited space availability and sustained leasing momentum led to an increase in rental values by about 3-8% q-o-q across non-IT developments in PBD and SBD Kharadi and by about 9-13% q-o-q across IT developments in CBD, PBD and SBD Kharadi


  • Leasing activity picked up on a quarterly basis
  • The city witnessed supply addition in the form of a medium-sized IT development in Salt Lake Sector V in PBD
  • Demand was largely driven by occupiers from research, consulting & analytics and BFSI sectors, followed by flexible space operators and engineering & manufacturing firms. Leasing activity was largely concentrated in IT spaces, owing to ample availability of space in quality developments
  • Rental values remained stable during the review period across all micro-markets


  • Space take-up was primarily concentrated in Kakkanad in SBD
  • Tech firms dominated leasing activity, followed by engineering & manufacturing corporates
  • Rental values remained stable across all micro-markets during the review period


  • The city witnessed quarterly increase in space take-up
  • Supply addition was witnessed in the form of five medium-sized non-IT developments across SG Highway and Makarba in SBD
  • Leasing activity was mainly driven by research, consulting & analytics firms, followed by engineering & manufacturing firms and tech companies
  • About 4-6% q-o-q rental increase witnessed in CBD, driven by sustained demand for space in investment-grade developments


In the wake of large number of global and domestic firms positioning India as the destination for higher skilled requirements for their global operations (through Global Inhouse Centers – GICs) or for tech-driven services; rather than low-end processes, the share of tech companies is expected to rise in 2019; with BFSI, engineering and manufacturing, research and consulting and flexible spaces, likely to account for a larger share in leasing activity on a yearly basis. CBRE also foresees occupiers to increase agility in their real estate portfolios within their core workplaces along with adding external flexible options.  Other sectors such as pharmaceuticals, telecommunications and e-commerce, are also likely to witness higher occupier demand, thereby giving impetus to the demand for commercial space.

Rental growth expected to continue


With supply addition expected in Chennai and Pune, residual spaces along with higher quality of new space are expected to drive rental growth. In Bangalore, the lack of readily available supply would result in rental growth to occur only on the basis of residual demand. In case of Hyderabad, the quantum of supply lined up for release is likely to limit rental growth – a trend that was already visible in 2018. A strong demand for space in quality developments is likely to result in a marginal growth in select locations in Delhi-NCR and Mumbai in 2019.

CBRE also expects SEZ and non-SEZ rental values to converge within the same micro-markets across cities. Overall, rentals are likely to remain firm with an upward bias in active locations.