Tech firms drive India office leasing rebound

Bengaluru

LEASING of offices in India have recovered to pre-pandemic levels after government-imposed lockdowns to combat the coronavirus led to the steepest fall in a decade, according to fresh data from Knight Frank.

Gross leasings across the top eight cities in October-December 2020 reached 115 per cent of the quarterly average for 2019 from 31 per cent the previous quarter, the research firm said in a report published on Wednesday.

The technology sector dominated with 41 per cent of total leasings across the second half of 2020 with Bengaluru, known as India's Silicon Valley, seeing transactions rise 8 per cent during the period from the previous year.

"Pre-commitments contributed 24 per cent of the total transacted volume of 1.63 million square metres (sq m) in the fourth quarter, signifying that businesses are re-initiating expansion plans in the new normal," Knight Frank said.

"With the possibility of a viable vaccine being made available soon, occupiers have renewed their search for expansion opportunities."

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India imposed one of the world's strictest lockdowns toward the end of March, which slammed almost all sectors of the economy while boosting the need for technology-driven services. Business have been gradually reopening since September as fresh infections slow.

Office space absorption dropped 33 per cent year-on-year in July-December to 2.06 million sq m, but increased by 28.8 per cent from the first half.

Average office rents in Bengaluru, Chennai and Hyderabad maintained 2019 levels, but rents in Mumbai, Pune and the National Capital Region fell by 5.6 per cent, 6 per cent and 4.4 per cent respectively.

The data also show residential sales of 94,997 units between July and December last year, a fall of 19 per cent from the same period in 2019 but an improvement of around 60 per cent from the first half of 2020, as a steep cut in interest rates made it more attractive to buy.

Key states like Maharashtra, which houses Mumbai, also reduced local taxes and overall prices fell in some cities.

Homes costing more than five million rupees (S$90,031) constituted 57 per cent of all sales during the period, as the relatively wealthy were less affected by the pandemic. BLOOMBERG