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Covid impact: Demand for office space to remain flat in 2021

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During January-June 2021, net absorption declined 19% Y-o-Y to 9.63 MSF. Bengaluru and Pune accounted for nearly 60% of the share. These two markets and Kolkata were the only cities that reported growth in demand in the first half this year compared to H1 2020.Throughout January-June 2021, web absorption declined 19% Y-o-Y to 9.63 MSF. Bengaluru and Pune accounted for practically 60% of the share. These two markets and Kolkata had been the one cities that reported development in demand within the first half this yr in comparison with H1 2020.

India’s workplace area leasing market has began to really feel the ache brought on by Covid-19-induced disruptions as not solely did the phase report a second consecutive quarter of decline in web absorption throughout Q2 2021, however Grade A workplace emptiness ranges additionally fell for the sixth straight quarter, breaching the 13-14% consolation zone for the primary time since 2017.

Actual property consultancy JLL India expects web workplace absorption throughout prime seven markets to stay flat on an annual foundation at round 25.6 million sq. ft (MSF), if there are not any extra lockdowns. “If vaccination targets are achieved and we don’t see one other main outbreak of the virus, the yr 2021 is almost certainly to shut on an encouraging notice,” it mentioned.

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India’s web workplace absorption stood at 4.39 MSF in April-June 2021, up 32% yr on yr (Y-o-Y). Nevertheless, on a sequential foundation, demand fell 16%. As within the final three-four quarters, throughout Q2 2021 the demand was largely led by Bengaluru and the IT-ITeS/ digital sector.

Throughout January-June 2021, web absorption declined 19% Y-o-Y to 9.63 MSF. Bengaluru and Pune accounted for practically 60% of the share. These two markets and Kolkata had been the one cities that reported development in demand within the first half this yr in comparison with H1 2020.

By way of provide, new completions stood at 11.67 MSF in Q2 2021, greater than double achieved in Q2 2020, JLL India mentioned including, “With addition of practically 12 MSF of area, the Grade A workplace inventory in prime 7 cities into consideration crossed 650 MSF. Throughout the first wave of Covid, new completions took successful as a result of unavailability of labour.”

JLL India mentioned that as a result of a gradual pipeline of places of work hitting the market, the demand-supply hole has elevated. Emptiness ranges throughout the highest seven markets rose to almost 16% on the finish Q2 2021 breaching the consolation zone of 13-14% for the primary time in 4 years. Nevertheless, with demand anticipated to choose up in coming quarters, emptiness is more likely to return to sub-15% ranges, it mentioned.

On the brighter aspect, JLL India chief economist, Samantak Das mentioned the market has proven extra resilience in Q2 2021 in comparison with the identical quarter final yr. The energy displayed by the workplace area market because the pandemic owes a lot to the truth that IT-ITeS sector has been largely unaffected by the financial downturn, he mentioned.

“IT-ITeS occupiers continued to account for a majority of the workplace leasing exercise in 2020 at round 50%. In 2021, we anticipate the IT-ITeS sector to stay the important thing occupier group whereas demand from rising sectors like e-commerce, manufacturing and healthcare is more likely to improve additional,” Das mentioned.

One other optimistic is that workplace leases had been steady throughout main markets in India in Q2 2021. Nevertheless, landlords proceed to be accommodative to the calls for of occupiers and assist deal closures. With emptiness ranges already hovering at round 16%, the following few quarters will likely be vital by way of pick-up in demand whereas sustaining the market buoyancy as deliberate provide enters the market, JLL India mentioned.

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