Maturing real estate market in India will result in further growth and supply of office space.

●       In a single year from Q3 2017 to Q3 2018, the space dedicated to co-working spaces across the 7 top cities increased from 1.11 million square feet to 3.44 square feet. 

• Co-working providers are looking at less-conventional spaces, such as airports, hotels, malls, libraries and metro stations.

• There are now 350 co-working players/service providers operating an estimated 500 shared workspaces across India. In 2010 there were 30 centres.

• 80-90% of operators started within the past 12-18 months. 

• Share of co-working sector in total office leasing was recorded to be approximately 10 per cent till Q3 2018, as opposed to four per cent during the first three quarters of 2017. 

• Growth in fintech tech startups is increasing the demand for low-cost and alternative office spaces.

India, April 10, 2019: The face of India’s office sector is evolving at a rapid pace. From urbanization of Indian cities to the rise of mega structures to the introduction of various new policies favouring the growth of a strong commercial real estate in the country, a number of factors continue to drive the segment’s growth.

2018 saw a strong absorption of offices across India 

Owing to these factors and rising investor interest in the Indian market, the country has witnessed strong absorption of offices during the year 2018. The total office leasing towards the end of 2018 was to the tune of approximately 33 million sq ft. In fact, a robust office sector absorption is predicted until 2020. This year, India will also see the announcements and subsequent listings of a number of real estate investment trusts (REITs). This will propel the market in a new era and will help development firms to build more and more quality, Grade A offices.

Many non-IT industries are now heavily contributing to office leasing 

With growing amount of leasing and investors’ activity, the office segment once dominated by information technology sector companies is now witnessing leasing by non-IT companies from other sectors. Hence, BFSI, consultancy business, telecom, healthcare, biotech, real estate construction, e-commerce and co-working service providers are actively taking up space. The increase in demand from non-IT occupiers across cities is evident from the changing pattern in occupier distribution being observed.

A city-wise glance of space take-up by non IT/ITeS occupiers reveals that:

• While in Bengaluru, Delhi/NCR and Chennai it is the manufacturing/industrial sector that has been leading in space take-up starting from 2013 till 3Q18, in Mumbai and Pune, BFSI has been the most prominent one.

• For Hyderabad, while BFSI was the most prominent sector in non IT/ITeS space take-up in 2013-2016, gradually the emerging E-commerce sector and consultancy have started gaining prominence in 2017, and during the first three quarters of 2018.

• In Kolkata, manufacturing/industrial sector absorbed the highest proportion of non IT/ITeS office space in 2013-2016 which changed to consultancy gaining prominence in 2017, but reverted again to manufacturing/industrial sector contributing the maximum during the first three quarters of 2018.

The rise of co-working spaces 

A number of other alternatives, including co-working, data centres, educational institutions and healthcare facilities are increasingly gaining importance. Hence we see development and construction firms focusing on these segments too.

• There are now 350 co-working players/service providers operating an estimated 500 shared workspaces across India. In 2010 there were 30 centres.
• In a single year from Q3 2017 to Q3 2018, the space dedicated to co-working spaces across the 7 top cities increased from 1.11 million square feet to 3.44 million square feet.
• 42% of India’s population is predicted to be living and working in its urban centres which offers a massive opportunity for them to adopt shared work spaces.

WELL Certified environments 

With the growth, new-age modern offices, occupiers and companies will focus on developing a WELL certified environmentally healthy and sustainable buildings that offer flexible and a clean environment to the workforce. WELL certified buildings can result in higher returns and values, greater marketability, faster leasing and sales velocity. Trends suggest that the country will continue to see an upgrade in already existing stock on these lines. With evolving transparency in the market, the supply of offices is definite to increase in coming years.

For further information, please visit https://www.jll.co.in/en/campaign-page/emerging-office-trends or download the full report here.

Corporate Comm India(CCI Newswire)