Bengaluru, Hyderabad, Chennai dominate office market in demand-supply, rental growth: Anarock report
Three major cities in south India -- Bengaluru, Hyderabad, and Chennai -- dominate India's office market with the contribution of 66 percent of the total demand for office space during the last financial year 2020-21, according to an Anarock report.
The consultant noted that the main southern office market has overtaken other regions in terms of new supply, net absorption, and even rental growth.
The net office absorption in FY21 in the top cities was 21.32 mn sq ft, of which these three southern cities absorbed about 14.06 million sq ft.
Mumbai Metropolitan Region and Pune absorbed 4.56 million sq ft (21 percent) and NCR 2.3 million sq ft (a mere 11 percent share).
During the financial year 2017-18, 31.15 million square feet of office space were leased in the top-7 cities. Of this net absorption, the southern cities collectively accounted for 47 percent, the western region 33 percent, and the northern region 17 percent.
Anarock Chairman Anuj Puri 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 start-ups locally over the past few years.'' The manufacturing and industrial sectors are also driving demand in these three cities, he added.
In terms of new office supply also, the southern cities have increased their share from 40 percent in FY18 to nearly 63 percent in FY21.
Of the total new office space completion of 40.25 mn sq ft in FY21 across the top-seven cities, the southern cities had a 63 percent share (about 25.55 million sqft.).
During the period under review, office rentals in NCR remained more or less stagnant, while MMR and Pune saw a mere 2 percent and 8 percent rental growth, respectively.
In Bengaluru, the average monthly office rentals increased by 15 percent to Rs 77 from Rs 67 per sq ft in FY18.
Rentals in Chennai have grown by 11 percent to Rs 60 from Rs 54 per sqft in FY18.
The average monthly rentals in MMR increased from Rs 123 per sqft in FY18 to Rs 125 per sqft in FY21.
Pune saw average rentals rise by 8 percent to Rs 68 from Rs 63 per sqft in FY18.
In NCR, average office rentals remained flat at Rs 78 per sq ft.
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