By Varun Singh

Office lease renewals that in pipeline in Bangalore, Gurugram, Mumbai, Noida, Pune and Chennai is the highest in 2021 at approx. 90 Mn sq ft space when compared to 2022 and 2023

Industry data and ANAROCK Research reveals that over 7,400 office leases spanning approx. 90 Mn sq ft area will come up for renewal in 2021 across the top 6 commercial real estate hubs – Bengaluru, Mumbai, Pune, Chennai, Gurugram and Noida.

Data further reveals that 2021 has the highest lease expiry pipeline when compared to the next two years – 2022 and 2023. Year 2022 will see nearly 7,000 leases for approx. 78 Mn sq ft come up for renewal, and approx..4,200 leases for over 55 Mn sq ft in 2023.

Of the approx. 7,400 office leases expiring in 2021, Mumbai has the highest share at about 44%, followed by Pune with a 17% share.

These two cities have been among the worst-affected by the second wave. The impact on leasing activity there over the year bears watching.

The total number of office leases coming up for renewal in 2021 account for 90 Mn sq. ft. area. Interestingly, in terms of area, Bengaluru has the largest share at about 37%, with Mumbai coming in a distant second with a share of about 19%.

Prashant Thakur, Director & Head – Research, ANAROCK Property Consultants says, “The office market has been under strain since the pandemic came in. However, the IT/ITeS sectors have been on a hiring spree in 2020 and 2021 due to massive business accruals. To accommodate these employees in a future when we see a gradual return of employees and adoption of hybrid workplace practices by Infotech giants, office space demand will grow. Office demand also is expected to gather momentum from 2022 in the wake of robust hiring by large corporates. These big corporates will definitely renew their leases, though some of the smaller companies may consider rationalizing space.”

Thakur further added, “The leases coming up for renewal in 2021 were entered into at much lower rentals – at rates that prevailed 3 to 5 years ago – since office leases are usually signed for the long-term. There is some room for rental escalation in many of these leases.”

Important Points

• Lease renewal pipeline in Bangalore, Gurugram, Mumbai, Noida, Pune & Chennai highest in 2021 at approx. 90 Mn sq ft space when compared to 2022 & 2023
• These leases were entered into at lower rental rates of 3-5 years ago; with office leases usually signed for long-term, there is some room for upward revisions
• Office market may pick up pace from 2022 in wake of robust hiring by large corporates; large corporates likely to renew their leases, smaller companies may consider rationalizing space
• Of approx. 7,400 leases up for renewal in 2021, Mumbai has highest share at 44%, followed by Pune with 17% share; both cities severely hit by the pandemic
• Of approx. 90 Mn sq ft area leases up for renewal in 2021, IT capital Bengaluru has the highest share at 37%, followed by Mumbai with 19% share
• Year 2022 to see approx. 7,000 leases accounting for approx. 78 Mn sq ft up for renewal; in 2023 it is approx. 4,200 leases for over 55 Mn sq ft

Key Trends Amid the 2nd Wave

The second wave in India is far more excruciating than the first, and some companies are once again in wait-and watch mode with their real estate decisions. Leasing activity has begun to tame down. This is also validated by the fact that average vacancy levels in Grade A office space across the top 7 cities is up again, breaching the 15% mark. Rising Covid-19 cases in cities like MMR and Bengaluru – the markets with highest commercial demand – and stringent curfew restrictions are cause for concern.

However, Mumbai and Pune are already beginning to see a decline in daily cases. Meanwhile, major IT/ITeS companies are hiring in bulk to fulfil the surge in work orders and have a healthy pipeline for the current year as well. Recent ANAROCK Research revealed that the top four Indian IT/ITeS firms – TCS, Infosys, HCL and Wipro – alone hired approx. 42,000 employees in the first nine months of FY 2021. Also, multinational majors Cognizant and Capgemini hired nearly 39,500 employees in CY 2020, with bulk hiring plans for CY 2021. They plan to hire ~23,000 and ~30,000 employees respectively in the CY 2021.

Many other IT firms are on a hiring spree amid acceleration in their overall business post the pandemic. This eventually bodes well for overall office space demand in 2022 and 2023, when we may see gradual return of normalcy coupled with the newly added workforce. The IT/ITeS sectors are among the prime drivers of overall leasing activity in the top cities. Bulk hiring by these firms will influence demand for large quality office spaces.

Also Read: High Street Rentals Hit By Pandemic

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–          1% or 360 projects in Maharashtra still remains unregistered

–          66% cases disposed; a fall by 6% in a year

By Ateeq Shaikh

Since 2017, 23% of projects registered with Maharashtra Real Estate Regulatory Authority (MahaRERA) are ready and possession of flats handover to the respective homebuyers.

The Mumbai Metropolitan Region being the country’s economic powerhouse, the maximum number of residential projects registered in India are in Maharashtra. It accounts for almost 50% of the total projects registered and nearly 60% of the total real estate agents registered under RERA. The six states of Maharashtra, Gujarat, Uttar Pradesh, Madhya Pradesh, Karnataka and Haryana constitute 90% of the total projects registered and cases disposed of in India.

A recently released report on Efficacy of RERA from the Consumer’s Perspective 2020 by Moneylife Foundation and HDFC, Mumbai and Pune account for over 90% of RERA registered properties in the country.

Since May 2017, the Real Estate (Regulation and Development) Act, 2016 has been in force in Maharashtra to administer the real estate sector that has a mix of organised and unorganised players.

As of February 2020, MahaRERA had 24,347 projects registered with them. Over a period of 13 months or upto March 1, 2021, including the lockdown months, has risen by 4,395 to 28,742. Of the total real estate projects, 6,690 are ready.

For the MahaRERA and the industry, the concern area is those projects that continue to be out of the regulatory framework’s fold. As per data with MahaRERA, as on March 1, 2021, there are as many as 360 such real estate projects.

Nonetheless, MahaRERA continues to be a model case study for the country with relatively high case disposals despite a fall in disposal rate. Of the 13,672 complaints received since May 2017 till March 1, 2021, it has disposed of 66.42% or 9,081 cases and in the process of hearing remainder 4,591 grievances.

As of February 2020, MahaRERA had disposed of 7,476 complaints or 72.09% out of 10,370 it had received. In the last one year, there is a fall by almost 6% in disposal rate of cases, the prime reason being setbacks in hearings during the initial weeks of the lockdown. During the lockdown period, the authority switched over to virtual hearings to ensure cases continue to be heard and orders passed.

Also Read: MahaRERA Is Tracking Investment Worth Rs 8 Lac Crore

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