India to contribute 37% of the APAC office space demand

Bangalore is expected to absorb the maximum amount of office space in Asia Pacific, as India is expected to contribute to 37% of the total demand in 2022 as per Cushman & Wakefield. In Asia Pacific, total demand for office was 80 million sq ft, which came down to 30 million sq. ft. in 2020 and in 2021 it came back to 60 msf. In 2022, we are expecting it to be 72 million sq ft and 2023 it will reach about 83 msf so it will reach the pre Covid level in 2023. Despite the brief uncertainty during the second wave, the office market across the top 8 cities has fared well with a perceptible growth in the market activity, especially in the second half, said the report.

In the next 2-3 years India will maintain the 40% share. In India on an average 35 million sq ft is delivered. In 2021 it was 40 msf and in 2022 it is expected to be 46 msf. 25% of the new supply is already pre committed. There is an active 40 msf of demand and it will only grow up. Most important thing which has gone into corporate is the sustainability part of it. Entire conversation has changed to employee safety. Developers have also started focusing on this big time.

The report further mentions markets such as Noida and Navi Mumbai to perform well with growing interest from tech companies to set up larger centres. Pune and Chennai are also expected to bounce back strongly with growing occupier interest. Tenants are actively discussing with developers while rebalancing/ optimizing the portfolio and are opting for early renewals wherever possible to negotiate better deals. While some of this can be attributed to a slowdown in demand, the impact of space optimization can’t be ignored.

Consolidation and rebalancing of portfolios among occupiers along with scheduled exits from some projects have also led to a rise in vacancy levels across cities. Delhi-NCR has registered the highest addition of vacant space primarily coming from non-core areas of Gurugram and Noida. Core locations in Gurugram have also witnessed an uptick in availability after years of ultra-low vacancy rates but a spurt in enquiries in H2 2021 suggests the market is set to tighten in 2022.