Knight Frank India launched the 11th edition of its flagship half-yearly report – India Real Estate. The report presents a comprehensive analysis of office market performance across eight cities for the period January – June 2019 (H1 2019).
The report findings establish that office space market experienced decadal high (half yearly) volume in supply and transactions in H1 2019. Office supply increased by 31% year-on-year (YoY) to 2.2 mnsq m (23.9 mnsqft) in the current analysis period, the highest level achieved in this decade.While transactions were recorded at 2.6 mn sq m (27.4 mn sq ft)higher by 26% YoY in H1 2019. Co-working space providers have taken up approximately 0.37 mnsq m (4.0 mnsqft) of office space during H1 2019, a 42% growth over H1 2018.
Office Market Highlights for Top 8 Cities
• Supply increased to a decadal high 2.2 mnsq m (23.9 mnsqft) recording a rise of 31% YoY.
• Transaction levels also recorded a similar decadal high of 2.6 mnsq m (27.4 mnsqft) for space transacted in a single period during H1 2019 due to demand from IT/ITeS and Co-working spaces.
• Bengaluru hits historic high in transactions as well as supply during H1 2019 with transactions hitting 8.3 mn sq. m. while supply increased by over 100% at 7.6 mn sq. m. in H1 2019.
• Average rental values across the eight cities grew at by 10% YoY during H1 2019. Ahmedabad experienced the maximum YoY rental growth of 14.3%, while Bengaluru and Hyderabad grew at 13.5% and 11.3% YoY respectively.
• The IT/ITeS sector accounted for 35% of all transactions in H1 2019as compared to the 28% in H1 2018 whereas, share of BFSI declined 13% in H1 2019 as compared to 18% in H1 2018 as Non-Banking Financial Companies’ (NBFCs) and banks with higher NPAs to curb expansion plans and liquidate non-core assets.
• Co-working space providers have taken up approximately 0.37 mnsq m (4.0 mnsqft) constituted about 15% of all transactions across topeight cities during H1 2019, a substantial increase of 42% over H1 2018.
• Strong demand scenario in office market keeps the vacancy stable at 13% in H1 2019, compared to a year ago. Southern markets record single digit vacancy rates, with Bangalore showcasing the lowest vacancy rate at 4% n H1 2019.
Shishir Baijal, Chairman and Managing Director, Knight Frank India said “Double digit rental growth in five out of eight markets reiterates the underlying strength of Indian office market. The spurt in demand for higher end roles in the Artificial Intelligence and data security domains have led to a welcome and significant 59% YoY increase in demand from the IT/ITeS sector during H1 2019. Co-working spaces continue to drive transaction volumes and influence occupier demand”