India’s Office Sector Remains Robust This Year Despite Global Headwinds

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Sustained growth due to strong fundamentals of demand: Experts

Mumbai: The Indian office sector has witnessed sustained growth in demand in 2023 despite the global sluggishness and the performance is seen as a testament to the strong fundamentals of demand and the absence of any lasting effects of the global headwinds.

The net office space absorption in the country is seen at par with 2022 closing at 37-39 million sq ft. With leasing activity expected to further pick up pace in the last quarter of 2023, the year is expес- ted to surpass the 2017-2019 average, showed a JLL India analysis.

Net absorption in the first nine months of the year was at 26 million sq ft, which is 68% of 2022 full year performance. Notably, a trend of flight to quality is creating demand polarisation towards properties owned and operated by institutional owners and to strong fundamentals established developers. India’s biggest office landlord.

Blackstone’s Nucleus office Parks has seen high demand across all its 16 grade A assets in five cities and recorded 1.5 mil- lion sq ft new leasing in the first three quarters of 2023-24. Majority of the demand was driven by domestic companies including entities like Viacom18, HDFC, Hindalco, and also Citibank, Capgemini and Google.

“We have observed a notable surge in office space demand among India’s domestic companies, primarily driven by the 1 burgeoning media, consulting and BFSI sectors. This growth is fuelled by new corporate strategies on attracting top talent through prime real estate, locations, and modern facilities,” Quaiser Parvez, CEO, Nucleus Office Parks, told ET. This, according to him, is a clear departure from the remote work trend post the pandemic, as firms recognize the value of in-person collaboration and a shared corporate culture.

“The office space in India’s top seven markets is expected to increase to over 800 million sq ft by the fourth quarter of 2023, up from the current 792.8 million sq ft as of September 2023. ESG continued to remain a decisive action point for all stakeholders in 2023 as energy consumption, green and net zero commitments are driving corporate action.,” said Rahul Arora, Head-Office Leasing Advisory and Retail Services, India, JLL.

According to him, the rise in importance of sustainability is reflected in the increase in green certified buildings in the last few years. Green certified buildings share in Grade A office stock went up from 39% in 2020 to 53% in September 2023.

Source- The Economic Times