- Of 21.32 mn sq. ft. net absorption in FY21 across the top 7 cities, Bengaluru, Chennai & Hyderabad accounted for a 66% share, followed by West (MMR & Pune) with 21% & North (NCR) with 11%
- Back in FY18, South cities comprised a 47% share, West – 33%, North – 17%
- Office supply – of 40.25 mn sq. ft. of new office space completion in FY21, South cities dominated with a 63% share; West – 19%, North – 18%
- Southern office rentals saw double-digit growth (11-15%) in this period; other regions lagged behind
The main Southern office market have overtaken other regions in terms of new supply, net absorption, and even rental growth. Among the top 7 cities, Bengaluru, Hyderabad and Chennai saw their share of total office leasing increase to 66% in FY21 (against 47% in FY18). The net office absorption in FY21 in the top cities was 21.32 mn sq. ft., and these three southern cities absorbed approx. 14.06 mn sq. ft. MMR and Pune absorbed 4.56 mn sq.ft (21%) and NCR 2.3 mn sq.ft (a mere 11% share.)
In FY18, 31.15 mn sq. ft. of office space were leased in the top 7 cities. Of this net absorption, the Southern cities collectively accounted for 47%, the Western region 33% and the Northern region 17%.
City
FY20-21
FY19-20
FY 18-19
FY 17-18
Net Absorption in top 7 cities (mn. sq. ft.)
21.32
43
35.8
31.15
South Cities Share
66%
55%
57%
47%
West Cities Share
21%
22%
25%
33%
North (NCR) Share
11%
20%
15%
17%
Source: ANAROCK Research
In terms of new office supply too, the Southern cities continued to ramp up their share – from 40% in FY18 to nearly 63% in FY21. Of the total new office space completion of 40.25 mn sq. ft. in FY21 across the top 7 cities, the Southern cities had a 63% share (approx. 25.55 mn sq. ft.). The office supply share of the main Western markets shrank to just 19% in FY21 (from 40% in FY18.)
Anuj Puri, Chairman – ANAROCK Group says, “The remarkable growth in the office market of these three Southern cities when viewed against their Western and Northern counterparts is directly attributable to robust demand by the IT/ITeS sector, affordable rentals, and the exponential growth of start-ups locally over the past few years. The manufacturing and industrial sectors are also driving demand here.”
City
FY20-21
FY19-20
FY 18-19
FY 17-18
New Completion in top 7 cities (mn. sq. ft.)
40.25
43.68
43.45
32.53
Share of South Cities
63%
59%
58%
40%
Share of West Cities
19%
16%
14%
40%
Share of North (NCR)
18%
24%
19%
17%
Source: ANAROCK Research
Rental Growth
Notably, between FY18 and FY21, office rentals in each of the southern cities have also shown double-digit growth. In this period, office rentals in NCR remained more or less stagnant while MMR and Pune saw a mere 2% and 8% rental growth respectively.
Avg. Office Rentals INR/sq.ft./month)
City
FY20-21
FY19-20
FY 18-19
FY 17-18
Bangalore
77
74
70
67
Chennai
60
60
56
54
Hyderabad
57
56
53
51
MMR
125
125
123
123
Pune
68
68
66
63
NCR
78
78
77
78
Source: ANAROCK Research
In Bengaluru, average monthly office rentals were INR 67 per sq. ft. in FY18 – they increased to INR 77 per sq. ft. in FY21 (up 15%)
In Chennai, average monthly rentals stood at INR 54 per sq. ft. in FY18 – they rose to INR 60 per sq. ft. in FY21 (up 11%)
In Hyderabad, average monthly office rentals rose from INR 51 per sq. ft. in FY18 to nearly INR 57 per sq. ft. in FY21 (up 12%)
In MMR, average monthly rentals increased from INR 123 per sq. ft. in FY18 to INR 125 per sq. ft. in FY21 (up by just 2%)
Pune saw average rentals rise from INR 63 per sq. ft. in FY18 to INR 68 per sq. ft. in in FY21 (up 8%)
In NCR, average office rentals remained unchanged in both years at INR 78 per sq. ft
Major Office Transactions in FY20-21
City
Building Name
Tenant
Micro Market
Approx. Area(In Mn Sqft)
Chennai
Embassy Block 3
BNY Mellon
Old Pallavaram
0.63
Chennai
Brigade WTC
Mckinsey
OMR
0.13
Bengaluru
Prestige Startech
Ola Technologies
Koramangala
0.43
Bengaluru
Prestige Minsk Square
Apple
Vasanth Nagar
0.4
Bengaluru
Gold Hill Excelsior Park
Siemens Technology
Electronic City
0.73
Bengaluru
Bagmane RIO
Amazon India
ORR
0.9
Bengaluru
RMZ Ecospace
Intel
ORR
0.45
Bengaluru
Prestige Tech Park
Byjus
ORR
0.3
Mumbai
Oberoi Commerz III
Morgan Stanley
Goregaon
1.1
Mumbai
Godrej Two
Amazon India
Vikhroli
0.26
Mumbai
Equinox Business Park
Tata Communications
LBS Marg
0.26
Mumbai
Liberty Tower
Sutherland Global
Navi Mumbai
0.13
Noida
Advant Navis
E&Y
Noida Expway
0.15
Noida
Berger Towers
Thales
Sector 16B
0.15
Gurgaon
DLF Downtown
Syneos Health
Sector 24
0.21
Gurgaon
Candor Tech Space
NTT
Sector 21
0.1
Hyderabad
Divyashree Orion
Wells Fargo
Gachibowli
1.3
Hyderabad
Salarpuria Sattva Knowledge Capital
Gachibowli
1
Pune
Sky One Corporate Park
Simpliwork
New Airport Road
0.23
Pune
Gera Commerzone
DWF Mindcrest
Kharadi
0.28