India Office Market Update: Q2 2023 (JLL) 24 August 2023
Gross leasing activity across the top seven cities of India was recorded at 12.7 mn sq ft in Q2 2023, building on the market traction sustained from the previous quarter and signalling the resilience in India’s office sector. In comparison to H1, gross leasing was also up by 2.5%, showing India’s office markets being clearly insulated from the global headwinds’ impact.
Net absorption is up 4% q-o-q but is typified by occupiers remaining slightly bearish on big expansion plans given the still swirling global headwinds of economic uncertainty. India’s net absorption across the top seven cities broke its declining trend to be at a three-quarter high. While occupiers do remain slightly bearish on expansion activity, India continues to see growth from its domestic firms and global occupiers spreading their wings, albeit at a slightly slower pace.
Space requirements have now stabilized and are showing signs of recovery with deal closures being rolled over and replaced by new requirements, keeping the demand pie intact. While the global headwinds and tech sluggishness would continue to be limiting factors, India’s resilience in the past six months is expected to sustain over the remainder of the year as well. Transaction closures will be relevant to the forecasts of 2023 with any slippages likely to keep 2023 slightly muted but positively impact the years beyond.
Key trends in office segment in Q2 2023
- Net absorption recovers to 7.95 mn sq ft; highest in three quarters
- Quarterly supply at 10.5 mn sq ft; up by 5.3% q-o-q
- Tech continues to lead quarterly occupier activity; flex consolidates its growth and is in second spot
- Rental growth endures across all major cities
