MUMBAI, 25 JULY, 2022 (GPN): The Vestian report ‘The Connect Q2 2022’ presents a comprehensive analysis of the office market performance of the seven key cities of the country – Bengaluru, Mumbai, Hyderabad, Chennai, Kolkata, NCR and Pune showcasing market trends during Q2 2022 as well as the first half of the year, along with future perspectives for the industry.

Executive Summary:

Half Year (H1 2022) office market trends

• The office markets of the seven key cities of the country are upward bound post a subdued yet relatively resilient pandemic inflicted period, the absorption of 27.2 million sqft of office space in H1 2022 equalling that of the pre-pandemic period of H1 2019. It also depicted a whopping 65% growth when compared with the absorption recorded a year ago in H1 2021. 
• New office space completions remained upbeat as well, the first half of the year witnessing 26.97 million sqft infused in the market, portending a growth of 32% when compared with the quantum that had become operational in H1 2021 and lagging behind the quantum in pre-pandemic period of H1 2019 by just 6%.

Second quarter (Q2 2022) office market trends

• Focusing on the quarter, the seven cities saw total absorption of approximately 14.9 million sqft of office space during Q2 2022, portraying a significant increase of 137% over the absorption observed in Q2 2021. 
• Bengaluru continued to lead the way with 28% share of the total absorption in Q2 2022, followed by Mumbai and Hyderabad both accounting for 16% share.
• New completions, recorded at 15 million sqft during Q2 2022, saw a substantial improvement of 70% over the quantum in Q2 2021.
• On weighted average rental front, Bengaluru and Pune saw an uptick in rental values in Q2 2022 vis-à-vis the values in Q2 2021, to the tune of 5% and 3% respectively.
• Vacancy levels moved upwards across most of the office markets during Q2 2022 on account of a fair quantum of supply entering the market in the recent months. 

Outlook

• Given the market traction witnessed in H1 2022, the office market of the country holds good potential to regain its momentum that was witnessed in the pre-pandemic era, and while the pandemic continues to make its presence felt, the strong fundamentals ruling the market will prove resilient enough. 
• Emerging alternative asset classes such as data centres and life sciences sector portend immense potential for growth in the forthcoming period with India providing a substantially competitive cost, making it one of the viable destinations for such establishments.
• With an increasing number of organizations committing to ESG and net-zero goals, companies would soon look towards occupying workspaces that support and adhere to such environmentally consistent guidelines.

Speaking about the findings, Dr. Shrinivas Rao, CEO, Vestian, said, “It has been heartening to note that the key office markets has seen a positive turnaround since the pandemic, Q2 2022 observing increased traction than the previous quarter. While the pandemic continues to make its presence felt, and uncertainties regarding the supply chain hiking construction material prices will continue to be of concern in the short term, the strong fundamentals ruling the market will prove resilient enough.” -Ends.