The demand for office space is expected to remain strong in 2020. This is based on the data available for 2019 which shows that sustained robust demand for office spaces has pushed leasing activity across the country to a new record high. According to Cushman and Wakefield, all India gross office leasing volumes touched a 69.4 million sft in 2019, compared to 49.5 million sft a year ago. The occupiers are opting for pre-leasing commercial real estate so as to future-proof their portfolios and hedge against any rental escalation.
The absorption figure for 2019 exceeds cumulative absorption of 2018 and and 2017. Net absorption across India rose to an all-time high of around 45 million sft, an increase of 1.56 times from 29 million sft in 2018. Hyderabad & Delhi-NCR noted unprecedented net absorption activity. IT companies expanded their real estate portfolio aggressively and contributed to the maximum share of leasing activity. In fact the IT-BPM sector accounted for a 32.6% share in leasing activity followed by captive and global capability centres at 19.8%. These helped office leasing performance in India surpass industry expectations and pave the way for an optimistic year ahead.
2019 saw a record-high preleasing activity at 17.2 million sft, a 7.2% on-year growth. Hyderabad with pre-commitments of 5.8 million sft garnered 34% share of the total followed by Bengaluru at 4.7 million sft at 27% share. Delhi-NCR, Mumbai and Chennai also contributed to a healthy pre-leasing demand. New supply of office spaces rose 47% from a year ago to 50.6 million sft during the year, with Delhi-NCR accounting for the largest share at 27%, where new completions have grown by a massive 140% during the year. Office stock in Hyderabad grew by 21% with new supply of 10 million sft during the year.