Amritsar, NFAPost: Notwithstanding the Covid-19 pandemic situation, Bengaluru has become the top occupier location for technology companies with a net absorption of 500,000 sq mtr in the first half of 2020, according to a report by Colliers International.
The IT city saw gross absorption of 172,000 sq mtr during the second quarter, the report showed. It also noted that Delhi-NCR was also firm, but Mumbai slowed down significantly.
The report highlighted that over the first half of 2020 as a whole, the biggest drivers of new supply in the Asia Pacific (APAC) region were indian cities.
In India, at least seven major cities witnessed gross leasing fall by only 36% during H1 2020, despite the long period of nationwide shutdown.
In case of new supplies, Bengaluru led the way with 641,000 sq mtr, followed by Delhi-NCR at 445,000 sq mtr. A major share of the new supplies were projects that were in the final stage of completion and had been held back from 2019.
However, it is surprising to see that these many activities took place in the country despite the national lockdown.
“Bengaluru continues to remain the strongest market for office leasing, backed by a historic absorption in 2019. The city has shown resilience in H1 2020 by being at the top despite a slowdown due to the lockdown. Over the period 2022-24, growth in office space demand in APAC will be led by both India and China. We anticipate most south India markets to see sharp recoveries and growth in 2021 in comparison with 2020,” said Arpit Mehrotra, Managing Director, Office Services (South India) at Colliers International India.
Colliers predicts a new supply of 1.9 million sq mtr for Bengaluru in 2020, which would be 24% higher on year.
For Delhi-NCR, the new supply in 2020 is predicted at 1.68 million sq mtr, up more than three times from a year ago and the highest level in the past three years.
The report, however, warned that if Covid-19 spread further in India, development projects may see delays, though it did not happen in the first half.
For the next five years, Colliers expects new supply in Bengaluru and Delhi-NCR to slow down from high levels of 2020, but to remain above 1 million sq mtr annually.
For Mumbai, Colliers expects new supply over the next five years to come around 540,000 sq mtr annually.
Rents to pick up in 2021
The report noted that rents are expected to increase marginally in 2021 as against the lows of this year, as the forecasted economic recovery becomes evident.
It noted that over the next five years, Singapore, Bangkok and Bengaluru should see rents increase by 3% or more, while Delhi-NCR, Auckland, Melbourne and Taipei should see rents increase in excess of 2%, as demand catches up with planned supply.
Steady vacancy levels with tight demand and supply should support increasing rents in these markets, Colliers said.
