The Office sector fell 47 percent year on year in the January-March quarter, with net absorption of 3.6 million square feet.
In the March quarter, gross absorption in the top six Indian cities was down 49.8 percent year on year.
The onset of the second covid wave could result in a delayed recovery for India’s commercial office sector, which is still experiencing a drop in leasing volumes. In the top six cities, gross absorption for the quarter fell by 49.8%.
A milder vaccination campaign likely to improve the lease transaction volume in the second half of FY22. Net absorption will likely be around 20 million square feet in 2021, similar to what it was in 2020.
Despite a seven-year bull market in rentals and falling vacancy rates, the global commercial real estate market stumbled in 2019.
After a weak year in 2020 with 20 million square feet of net absorption due to the impact of Covid-19, net absorption is expected to gradually improve and reach an estimated 24.3 million square feet in 2021 and 29.8 million square feet in 2022.
In 2019, Bengaluru had an office market absorption rate of approximately 22%, and Grade A vacancy was at 5%. It aims to keep more than a quarter of net absorptions in 2021 and 2022.
In comparison with the residential market in India, the office and retail markets require more capital. In the long run analysts believe office and shopping mall developments will grow in size and quality.
Flexible workspace was available in the top six cities at the end of February. The largest cities are Bengaluru, Hyderabad, and Mumbai.