While Ahmedabad, Kolkata, Chennai and Hyderabad markets witnessed an increase in office supply, the report pointed out that supply in five cities Bengaluru, Mumbai, Delhi-NCR, Pune and Kochi declined last year.
As per the data, the new office supply in Ahmedabad jumped by over 400 per cent to 4.6 million square feet in 2022 from 0.9 million square feet in the preceding year.
Not only in percentage terms, but Ahmedabad also topped in an absolute increase in fresh supply with an addition of 3.7 million square feet area last year.
Explaining the reason behind the sharp jump, Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said, “With the lifting of lockdown restrictions, Ahmedabad witnessed stronger recovery. This was against the backdrop of pent-up demand, coupled with continued infrastructure push from the government”.
The consultant said the new supply was limited during the COVID pandemic.
With the revival in demand, Magazine noted that developers became active to tap in this pent-up demand resulting in an influx of supply.
As per the CBRE, the new office supply in Chennai more than doubled to 4 million square feet last year from 1.5 million square feet during the 2021 calendar year.
Kolkata saw a 25 per cent growth in new supply to 0.06 million square feet from 0.05 million square feet.
New office supply in Hyderabad went up by 4 per cent to 13.8 million square feet from 13.2 million square feet.
Among cities that saw muted supply, CBRE India data showed that the new supply of office space fell 11 per cent in Delhi-NCR to 9.2 million square feet from 10.3 million square feet.
Mumbai witnessed a decline of 41 per cent to 3.5 million square feet from 6 million square feet.
New office supply in Bengaluru dipped marginally by 2 per cent to 10.9 million square feet against 11.2 million square feet.
Pune saw a 26 per cent decline in fresh supply to 4.3 million square feet from 5.8 million square feet.
Fresh office supply in Kochi dropped 87 per cent to 0.1 million square feet during the 2022 calendar year from 0.7 million square feet in the previous year.
“Mumbai witnessed the majority of project launches during 2020-21. As a result, the larger projects are expected to become operational by end of 2024-25,” Magazine said.
In Pune, he noted that developers continue to opt for a cautious approach and they are applying for occupation certificates (OCs) according to the demand.
“For NCR, a few under-construction IT projects in the Noida Expressway micro-market got pushed to 2023 owing to delays in receiving OC,” Magazine said.
Moreover, upcoming towers/phases in the existing SEZ projects in both Gurugram and Noida saw delays in construction completion, the consultant said.
This could be primarily attributed to lower enquiry levels from corporates in SEZs and delays in the passage of the DESH Bill, Magazine felt.
New supply dropped marginally by about 2 per cent almost in Bengaluru, he added.
On the outlook, CBRE India said, “A strong supply pipeline and continued occupier interest in investment-grade buildings by leading developers and institutional owners in core locations is expected to lead to an increase in development completions in 2023”.
Bengaluru, Hyderabad and Delhi-NCR are anticipated to continue to dominate supply in the coming year, it added.
On the demand side, CBRE data showed that the gross leasing of office space rose 40 per cent to 56.6 million square feet in 2022 from 40.5 million square feet in the previous year.
Ahmedabad saw the maximum rise in gross leasing, which jumped to 1.2 million square feet in 2022 from 0.3 million square feet in the previous year.
Among all the nine cities, only Hyderabad saw a decline in leasing activities.
