Office transactions hit historic high of 60.6 msf in 2019
Bengaluru dominates office leasing in 2019 with 15.3 msf; also sees highest rental growth amongst all cities at 8.1% Y-o-Y
By Varun Singh
The supply constrained Indian office market saw an unprecedented influx of office space in 2019 that pushed transaction levels to an all-time high, both in annual and half yearly terms.
Close to 61.3 million sq ft (msf) of office space was delivered during the year, amounting to a 56% YoY growth over 2018.
Bulk of 2019’s office space supply came online during the second half of the year (H2 2019) at 37.5 msf, registering a 78% YoY growth over the previous period.
2019 saw Bengaluru experience the highest quantum of new supply at 16.1 msf, followed by NCR at 12.3 msf and Hyderabad at 10.9 msf. Except MMR and Pune, all other markets saw a positive growth in office supply.
Office leasing activity in 2019 touched a historic high 60.6 msf despite the ongoing slowdown in the economy, registering a 27% YoY growth over 2018. H2 2019 also saw a similar growth in transaction volumes at 29% and accounted for a record high of 33.2 msf.
H2 2019 incidentally also represented the first half-year period since H2 2012 in which the space transacted was less than the supply that came online during that period.
Bengaluru, which has dominated this decade in terms of transaction volumes, saw the highest volume of office space leased again in 2019 at 15.3 msf, followed by Hyderabad at 12.8 msf, nearly twice its previous annual high.
Shishir Baijal, Chairman and Managing Director, Knight Frank India, said, “Office leasing in India has been growing from strength to strength despite a sluggish economy, with ample investment demand for high-quality assets. It would be interesting to see if the massive supply that is lined up to come online in the near future across major markets, and macro-economic headwinds put rental growth under pressure.”
Hyderabad saw a huge jump when it came to transactions, it grew by 105% YoY when compared to last year. In H2 of 2018 Hyderabad had transactions of 4.3 million sq ft, which went up to 8.9 million sq ft.
The same for Mumbai remained unchanged, while Bengaluru saw a jump of 1%, NCR saw a jump of 22%, Chennai witnessed a jump of 95%. The lowest was in Pune which saw a decline of 11% in H2 of 2019 when compared to H2 of 2018.