Pune has seen the highest year-on-year absorption of office spaces in the country in 2022. The city, as per Savills India Research, a real estate research firm, saw absorption of 6.4 million square feet (mnsqft) of office space as compared to 2.9 mnsqft in 2021. However, the possible resurgence of another Covid-19 wave has put office spaces on caution ahead of the new year.
The year 2022, for both office and residential real estate, was marked by improved absorption. As Covid-19 weaned, companies adopted either hybrid or called their work force back to their offices. Thus, office space absorption, which was put on hold in 2020 and 2021, saw good absorption.
SavillтАЩs research saw the top six cities тАФ Pune, Mumbai, National Capital Region of Delhi (NCR), Bengaluru, Chennai and Hyderabad тАФ absorb 54.8 mnsqft of office space which in 2021 was 36.9 mnsqft.
тАЬIT continues to drive the office market with 38.9% share of total leasing in 2022. With increased adoption of hybrid work, flexible workspaces contribution improved from 12.7% in 2021 to 14.1%in 2022. Banking, Financial Services and Insurance (BFSI) also maintained its pre-eminence at 12.2% share. Engineering and manufacturing, another important segment of demand registered approx. 8.2% share of demand in 2022,тАЭ the report said.
Incidentally, Pune saw the highest year-on-year increase in supply of new office space. At 7.3 mnsqft, this was a 136 per cent increase from the 3.1 mnsqft of absorption the city saw in 2021. Across the country, new supply stood at 53.4 mnsqft which was a 45.1 per cent increase from the 36.8 mnsqft of supply in 2021. Rentals have remained more or less stable as vacancy is almost the same at a little more than 18 per cent.
While the first half of 2022 saw robust absorption, the second part saw some caution creeping into the market. This was mostly because of signs of a global slow down which can affect the Indian markets as well.
Anurag Mathur, CEO, Savills India, pointed to the inherent strength of demand in India. тАЬThe bounce-back further establishes two things: the flex spaces proposition is on solid ground, and secondly, office occupancies have returned resoundingly, even for the tech sector. These and several other factors speak to the long-term potential of the office market in India. While the need to remain vigilant is unquestioned, the policy ecosystem and industry actions will hopefully create the right path in 2023,тАЭ he said.
