New Delhi, Sep 13 The office market in South India has overtaken other regions in terms of new supply, net absorption, and even rental growth.
An Anarock report released on Monday said that among the top seven cities Bengaluru, Hyderabad and Chennai saw their share of total office leasing increase to 66 per cent in FY21, from 47 per cent in FY18. The other top markets are Mumbai Metropolitan Region, Pune, Delhi-NCR and Kolkata.
The net office absorption in FY21 in the top cities was 21.32 million square feet, and these three southern cities absorbed around 14.06 million square feet.
The Mumbai Metropolitan Region (MMR) and Pune in Maharashtra absorbed 4.56 million square feet (21 per cent) and the Delhi-National Capital Region (NCR) 2.3 million square feet.
In FY18, 31.15 million square feet of office space were leased in the top seven cities. Of this net absorption, the southern cities collectively accounted for 47 per cent, the western and northern regions accounted for 33 per cent and 17 per cent respectively.
In terms of new office supply too, the southern cities continued to ramp up their share, from 40 per cent in FY18 to nearly 63 per cent in FY21. Of the total new office space completion of 40.25 million square feet in FY21 across the top 7 cities, the southern cities had a 63 per cent share (around 25.55 million square feet).
The office supply share of the main western markets shrank to just 19 per cent in FY21 from 40 per cent in FY18.
Anuj Puri, Chairman of Anarock Group said: "The remarkable growth in the office market of these three Southern cities when viewed against their western and northern counterparts is directly attributable to robust demand by the IT/ITeS sector, affordable rentals, and the exponential growth of startups locally over the past few years. The manufacturing and industrial sectors are also driving demand here."
Puri said that the remarkable growth in the office market of these three southern cities when viewed against their western and northern counterparts is directly attributable to robust demand by the IT/ITeS sector.
As per the report, between FY18 and FY21, office rentals in each of the southern cities have also shown double-digit growth. In this period, office rentals in NCR remained more or less stagnant while MMR and Pune saw a mere 2 per cent and 8 per cent rental growth respectively.
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