HomeDaily NewsDNA: Hyderabad replaces Mumbai as the second most active market after Bengaluru.

DNA: Hyderabad replaces Mumbai as the second most active market after Bengaluru.

Despite currency fluctuations, gross leasing activity in India has been buoyant across the seven major cities. The gross leasing activity in India was recorded at 36.4 million sq ft for the first nine months of 2018, up 26 per cent Year on Year basis. Pan-India demand for Grade A office space was driven by the technology sector (48 per cent) in Quarter 3 2018, followed by banking and insurance representing 19 per cent of the total leasing volume. The need for workspace efficiency and a collaborative work environment has increased demand for flexible workspace, which accounted for 13 per cent of pan-India office leasing volume in Q3 2018. This is what the research by Colliers International, a global real estate services and investment management company says.

“Despite currency fluctuations, the gross leasing activity in India across major 7 cities was recorded at 36.4 million sq feet for the first nine months of 2018, up 26 per cent YoY. Bengaluru again saw the bulk (30 per cent) of leasing activity during Q3 at 3.7 million sq feet followed by Hyderabad which replaced Mumbai to be the second most active market”, said Ritesh Sachdev, Senior Executive Director, Occupier Services at Colliers International India. The leasing activity in Hyderabad doubled over Q2 to 2.1 million sq ft owing to large transactions by technology occupiers in the Secondary Business District (SBD) micro market.

According to the report, flexible workspaces or co-working has contributed close to 13% in the total year-to-date Q3 office leasing, reporting a 2x growth from the last nine months of 2018. This trend indicates that 2019 will be an even more active year for the flexible workspace sector, fueled by an increase in end-user demand from the IT industry, looking for ways to mitigate real estate costs and seeking flexible solutions.

Some Key markets.

Bengaluru: Bengaluru recorded gross office absorption of 3.7 million sq ft in Q3 2018, representing a growth of 55% from the same period last year. Total Grade A office leasing through Q3 2018 was 11.4 million sq ft. Further supporting the city’s real estate growth is the steady demand from the technology sector that constituted 41% of the total leasing activity in Q3 2018. This was followed by the Banking Financial Services and Insurance (BFSI) sector accounting for 27% of leasing activity, flexible workspace operators on 15%.

Hyderabad: It defeated Mumbai to reach the second sport. Hyderabad recorded 2.13 million sq ft of gross office leasing in Q3 2018. YTD gross absorption is 3.60 million sq ft, which is similar to 2017 levels. In Q3 there was an increase in the number of deals by IT-ITeS occupiers, and the average deal size was 79,000 sq feet, higher than the annual average over the last two years of 45,000 sq feet. Deals greater than 1,000,000 sq feet constituted 70% of total leasing activity in Q3 2018, which is 30% higher than Q2 2018.

Mumbai: Mumbai recorded a gross absorption of 1.9 million sq feet in Q3 2018, a QoQ increase of 11%. This take-up was concentrated in the Andheri East (25%), Navi Mumbai (18%), LBS/Eastern Suburbs (15%) and Goregaon/JVLR (12%) micro markets. For the second consecutive quarter, flexible workspace operators drove leasing activity in Mumbai accounting for nearly 36% of gross absorption in Q3 2018, followed by BFSI occupiers representing 28% and consulting occupiers accounting for 15%.

Gurugram: Here, gross absorption declined 60% QoQ and 50% YoY. Q3 2018 noted leasing activity of 0.80 million sq ft with most occupiers expanding operations in the city. Contributing to the decline, deals in excess of 50,000 sq ft comprised 43% of leasing activity, compared to 69% in Q2 2018.

Delhi: The office market recorded gross absorption of 0.14 million sq ft in Q3 2018, representing a quarterly contraction of 6.7%. Over the last three quarters, the continued decline in demand can be attributed to a lack of Grade A space in major micro markets such as the CBD and Aerocity, as evidenced by the CBD recording a significant decline in take-up compared to last quarter.

Pune: Pune witnessed gross absorption of 1.8 million sq ft in Q3 2018, more than double the absorption in Q2 2018. The leasing activity is driven by absorption of pre-committed spaces by technology occupiers and flexible workspace operators. Despite significant new supply, rental values appreciated 3-6% QoQ in select micro markets including Nagar Road, Baner and Kharadi.