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Office leasing across top 6 cities at 30.4 mn sq ft, grows 130% YoY in H1’22: Savills

August 9, 2022: Office space absorption across India’s six major cities stood at 30.4 mn sqft registering a 130% year on year growth as of June 2022, according to real estate advisory firm Savills India. The first half of 2022 also witnessed 76% increase in new supply infusion at 32.4 mn sqft. With this, the total Grade A office market stock in the country stands at 676.9 mn sqft  

DemandYoY ChangeSupplyYoY Change
All India30.4 mn sqft130%32.4 mn sqft76%
Bengaluru10.7 mn sqft110%12.2 mn sqft77%
Delhi NCR5.6 mn sqft194%2.2 mn sqft-44%
Pune3.7 mn sqft4x4.5 mn sqft6x
Hyderabad3.6 mn sqft38%6.2 mn sqft20%
Chennai3.6mn sqft173%3.5 mn sqft8x
Mumbai3.3 mn sqft2x3.8 mn sqft3x

Source: Savills India Research

Key Highlights from the Report 

  • Top 3 cities Bengaluru, Delhi NCR and Pune, contributed to 66% of leasing activity in H1 2022
  • Bengaluru continued to remain the frontrunner with 10.7 mn sqft of leasing activity, registering a 110% increase from H1 2021
  • Meanwhile, overall absorption in cities of Pune, Chennai, Hyderabad and Mumbai remain similar in magnitude between 3.3 to 3.7 mn sqft 
  • Technology sector led the demand for office space with around 42% 
  • Pharma & Healthcare occupiers increased their space take up by 2.8x when compared to H1 2021
  • The share of engineering and manufacturing as well as the flexible workspace segment increased by 3.3x and 4.8x respectively
  • Large deals of more than 100,000 sq ft in size accounted for 41% of overall transaction activity as compared to 44% in H1 2021
  • On the other hand, mid-size deals had close to 39% share in H1 2022 when compared to 34% in the previous year
  • Bengaluru witnessed the highest share of large deals at 45% followed by Hyderabad and Chennai. 
  • Delhi NCR saw a dip of 44% YoY in new supply infusion, while Bengaluru recorded the highest supply infusion amongst the top 6 cities and had a share of 37% in H1 2022
  •  On account of supply outpacing demand, overall vacancy levels increased up to 19.2% and is likely to increase further due to strong construction pipeline in Southern cities, namely, Bengaluru, Chennai and Hyderabad.
  •  In terms of rental values, Gurugram and NOIDA saw the highest YoY growth at 20% and 11% respectively. 
  • Pune, however, saw its rental value remain range bound 
SectorDemand Share
IT-BPM41.9%
Flexible Workspaces17.8%
BFSI7.5%
Engineering and Manufacturing 12.6%
Pharma & Healthcare5.8%
Consulting 3.9%

“The year started with rising optimism on the back of growth in the 2021 calendar. Despite the impact of the third wave and Russia-Ukraine conflict which overshadowed the first quarter economically, occupier confidence stayed strong. Most businesses took advantage of the available inventory to upgrade their real estate portfolios, which resulted in strong leasing activity across top 6 cities. Supply grew as well, making it an end users’ market. 2022 is expected to reach pre-pandemic levels as technology and IT-BPM sectors are once again driving demand for the office spaces.” said Arvind Nandan, Managing Director – Research and Consulting, Savills India.

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