Vestian, FICCI release report, ‘Shifting Trends in Indian Office Market’ and Understanding the New Cogs

• The report consists of market trends observed in the seven major cities of the country, encompassing Bangalore, Hyderabad, Chennai, Pune, Kolkata, Mumbai, and NCR
• Office absorption in the first half of 2022 recorded at 27.2 million sqft pan-India; equals the absorption witnessed during pre-pandemic period of H1 2019
• New office completions pan-India pegged at 26.9 million sqft in H1 2022, depicting a 32% YoY improvement
• The NCR market has shown marked resilience by making a fast turnaround after witnessing a constricted market in the second quarter of 2021 owing to the pandemic’s second wave

NCR, July 7, 2022: Vestian, in association with FICCI, released a report titled ‘Shifting Trends in the Indian Office Market: Understanding the New Cogs’. This report walks through the COVID-19 outbreak and sheds light on the key insights that were perceptible in this period.

Sanjay Dutt, Joint Chairman of FICCI Real Estate Committee and MD & CEO, Tata Realty & Infrastructure Ltd., said, “FICCI and Vestian have co-created this report on emerging trends that are being adopted in office spaces by companies across the country. We observe that India is leading to changing work cultures and environments. I am confident that the report’s findings would be useful not only for realtors but also for consumers, the government, research & academic institutes, and the industry.”

Dr Shrinivas Rao, FRICS, CEO, Vestian, said, “This report aims to provide an insight into the various facets that emerged during the pandemic, most of which are still evolving constantly in tandem with the change in scenario. With the COVID-19 event impacting occupier expectations and consequently leading to a shift in market dynamics, it is imperative to understand the opportunities presented in the new environment. Newer cogs such as proptech, ESG implementation and policy changes have emerged on the real estate scene and harbour potential to take the sector to the next level of development.”

Key highlights of NCR in the report:

• In sharp contrast to the other key cities, the ‘Other Services Sector’ in NCR accounted for a major share of the total leasing in both pre-pandemic and during-the-pandemic scenarios, chiefly consisting of occupier segments like learning and education, healthcare, and other diversified business conglomerates that took up space. However, its share had reduced right before and after the pandemic hit before regaining ground in H1 2021.
• The IT/ITeS sector, at the same time, saw its share increase just before and after the pandemic outbreak, recording nearly 60% share in H1 2020 before cooling down to 19% share in H1 2022, given that most companies are still working in hybrid mode.
• The growth of the co-working/managed office space segment has been rather erratic, and with some of the IT sector’s demand shifting to co-working spaces due to a change in real estate strategies, its share has picked up pace in H1 2022.
• The NCR market has shown marked resilience by making a fast turnaround after witnessing a constricted market in the second quarter of 2021 owing to the pandemic’s second wave.
• The PBD Gurugram market, considered the most preferred business district in NCR, continued to lead occupier demand through the pandemic period as well.
• PBD Noida market, another favoured office destination, had witnessed increased demand just before the pandemic struck. However, its share has been on a gradually reducing trend in the past two years, the majority of the occupiers looking towards the Gurugram micro-markets.

Gearing up for the future by understanding the New Cogs of the office market dynamics:

• Push to infrastructure development has been one of the major catalysing factors to stimulate the market in the aftermath of the pandemic. Additionally, policy announcements such as granting infrastructure status to data centres and rebuilding of the SEZ norms would undoubtedly impact the office market.
• In FY 2021, approximately 30 companies hired 3.6 lakhs freshers, out of which India’s top 5 tech companies such as TCS, Infosys, Cognizant, HCL Tech, and Tech Mahindra have hired 2.3 lakhs freshers. This alone would translate into the absorption of over 18.5 million sqft of office space in India.
• With ESG coming into the picture, the emphasis on sustainability has driven up considerable investment in green buildings and clean energy infrastructure. Compared with conventional structures, buildings with stronger environmental credentials that depict ESG compliance generate higher rents, fetch higher sale prices, increase retention rates, and also demonstrate lower rates of obsolescence. 
• India’s co-working spaces, initially occupied by start-ups and freelancers are now seeing increasing preferences by larger corporations in Tier I as well as Tier II cities. Not surprisingly, the sector accounted for nearly 20% of the transacted space during H1 2022 as against 15% in 2021.

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