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Bengaluru, Chennai, and Hyderabad Recorded Gross Absorption of 14 Million sq ft in H1 2019: Colliers International India
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BENGALURU, July 15, 2019 /PRNewswire/ -- In H1 2019, Bengaluru yet again proved to be the frontrunner in office leasing with 30.0% share in pan-India leasing. Gross absorption in the first half of 2019 was recorded at 7.4 million sq ft, a marginal decline of 3.0% from H1 2019. The city's traditional office demand driver, the Information Technology Business Process Management (IT-BPM) sector, accounted for about 30.0% of the total leasing volume, down from a 45.0% share in H1 2018, mainly due to consolidations and increasing take-up by flexible workspace operators.

Bengaluru's new supply doubled as compared to H1 2018, with an addition of 8.0 million sq ft in H1 2019. From 2019 to 2023, Bengaluru's stock  is expected to increase by around 39.0%, with an addition of around 65.0 million sq ft of new supply.

"We forecast the ORR micro market to account for the largest quantity of supply, 31.0%, through 2023. In the light of declining vacancy levels, we recommend occupiers pre-commit to space in preferred locations of ORR and Whitefield to leverage current rental levels. We also expect continued demand from the technology sector and flexible workspace operators to drive leasing in Bengaluru over 2019-2023. By the end of 2023, we expect vacancy levels to decline to 4.0%, led by robust leasing by sectors such as technology and flexible workspace operators," said Arpit Mehrotra, Senior Director, Office Services (Bengaluru & Hyderabad) at Colliers International India.

In H1 2019, Hyderabad's gross leasing more than doubled as compared to H1 2018, recording 3.8 million sq ft. By the end of 2019, gross leasing in Hyderabad is expected to reach a new record level of around 7.2 million sq feet. In H1 2019, gross leasing by Information Technology - Business Process Management (IT-BPM), flexible workspace operators and engineering and manufacturing occupiers doubled YoY. The IT-BPM sector accounted for around 48.0% of the total leasing volume in H1 2019, while flexible workspace operators and the engineering and manufacturing sector constituted around 25.0% and 11.0% respectively.

"We expect the demand from the technology occupiers and flexible workspace operators to strengthen the leasing momentum. We would recommend developers to cautiously launch any new projects, considering the large upcoming supply pipeline of 85 million sq ft (7.8 million sq m) over 2019-2023. We project the infusion of new supply over 2019-2023 to inflate stock by around 158%, thus pushing vacancy levels to 35.2% by end of 2023. Due in part to the higher quality of the new supply, and buoyant demand from technology occupiers and flexible workspace operators, we expect rents to grow at a CAGR of 2.1% over 2019-2023," says  Arpit Mehrotra, Senior Director, Office Services (Bengaluru & Hyderabad) at Colliers International India.

In H1 2019, Hyderabad witnessed new supply of 8.6 million sq feet (799,250 sq meters), around a four-fold increase from H1 2018. Touching new record levels over the previous eight years, 2019 is expected to witness around 19.0 million sq ft of new Grade A office space.

Chennai recorded gross leasing of 1.0 million sq ft in Q2 2019, totalling to 2.6 million sq ft in H1 2019, an increase of 28.0% from H1 2018. Net absorption in H1 2019, constituted 94.0% of the gross leasing, indicating healthy demand in the city. In H1 2019, OMR pre-toll witnessed increased leasing activity, accounting for around 21.0% of the total leasing volume in H1 2019. The Central Business District (CBD) emerged as the second most active micromarket in H1 2019, with a share of 18.0% of the total leasing volume

"Office leasing in Chennai witnessed a continuing positive momentum in the first half of 2019 as well.  Demand for quality Grade-A space, pre-commitments by large occupiers, migration to SEZs and large volume consumption by co-working operators are some of the key factors contributing to over 2.5 million Sft, a whopping 28% increase vis-Ă -vis H1 2018.  Interesting to note that all micro markets in the city, without exception, showed robust leasing and thus further reducing vacancy. Rentals would continue to inch higher until fresh supply is infused into the market; which is expected next year," said Shaju Thomas, Senior Director, Office Services (Chennai) at Colliers International India.

In H1 2019, Chennai witnessed new supply of around 1.4 million sq ft, 23.0% higher than H1 2018. Over 2019-2023, Grade A is expected supply infusion of around 23.0 million sq feet (2.1 million sq meters), thus inflating stock by around 35.0%.

To download the Office Market report, click here.

About Colliers International Group Inc.

Colliers International (NASDAQ: CIGI) (TSX: CIGI) is a leading global real estate services and investment management company. With operations in 68 countries, our 14,000 enterprising people work collaboratively to provide expert advice and services to maximize the value of property for real estate occupiers, owners and investors. For more than 20 years, our experienced leadership team, owning more than 40% of our equity, have delivered industry-leading investment returns for shareholders. In 2018, corporate revenues were $2.8 billion ($3.3 billion including affiliates), with more than $26 billion of assets under management.

For the latest news from Colliers India, visit http://www.colliers.com/en-gb/india. To follow us on twitter, simply click on this twitter handle @Colliersintlind and to follow us on LinkedIn, simply click here.

For further information, please contact:
Sukanya Dasgupta
Sr. General Manager & Head, Marketing & Communications
Colliers International India
Phone: +91-9811867682 / +91-8826377335
Email: Sukanya.dasgupta@colliers.com

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