Indian Economy News

Strong economy to take office leasing to 40-45 million square feet in 2023: Colliers

  • IBEF
  • August 25, 2023

According to a report published by real estate firm Colliers, the Indian office sector is anticipated to record 40-45 million square feet of gross leasing across the top six markets in 2023, which is 10-15% more than Colliers had predicted.

As per the consultancy's "India Office Market-Changing Winds" report, the robust economic outlook is responsible for the increased demand.

The report was based on data from six Indian cities including Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai, and Pune.

With 10.1 million square feet of gross absorption in the first quarter of 2023, things got off to a cautious start. Nonetheless, a noticeably quicker recovery was observed in the next quarter. India saw 14.6 million square feet of leasing activity during the quarter, an increase of over 50% from quarter to quarter (q-o-q).

The research highlighted that this increase in leasing activity was caused by an improvement in business sentiments across a variety of demand segments and a noticeable improvement in the domestic economy.

Chennai had the largest quarter-over-quarter shift in demand, with demand rising 113% to 3.3 million square feet in the June quarter. Pune came next, expanding by 109% to 1.7 million square feet, and Mumbai grew by 61% to 1.6 million square feet. The momentum is probably going to carry over into the second half of the year, which should lead to better-than-expected office market performance in 2023.

According to the report, the tech sector, primarily rooted in the US, EU, and UK, significantly affects office space leasing in India.

According to Mr. Peush Jain, Managing Director of Office Services, Colliers India said, "Macroeconomic indicators have been displaying consistent positive signals. Certain parameters have become more emphatic in recent months. While repo rates have probably entered a stable phase, GST collections, manufacturing and service indices and equity markets, in general, have been reflecting strong undercurrents of accelerated momentum."

The technology industry led the office space demand in the first half of 2023, accounting for 24% of the share. The engineering and manufacturing and flex space sectors came in second and third, respectively, with 18% and 17% shares of the market.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.