New supply of office space nearly doubled in January-June to 23.7 million square feet across six cities on lower base effect and rise in demand, according to Colliers.
The supply stood at 12.1 million square feet in the January-June 2021 across these six cities – Bengaluru, Chennai, Hyderabad, Pune, Mumbai and Delhi-NCR.
As per the data, in Chennai, the new supply jumped to 4.2 million square feet in January-June 2022 from 0.4 million square feet in January-June 2021.
New supply in Delhi-NCR rose to 2.4 million square feet from 1.5 million square feet.
Hyderabad witnessed more than three-fold jump in office supply to 6.4 million square feet in the first half of 2022 from 1.9 million square feet in the year-ago period.
In Mumbai, the new supply grew to 1.1 million square feet from 0.8 million square feet. Pune saw a multi-fold jump in the new supply to 3.8 million square feet in January-June 2022 from 0.4 million square feet in the year-ago period.
The new supply in Bengaluru fell to 5.7 million square feet in January-June 2022 from 7.3 million square feet in the year-ago period.
On demand side, during January-June 2022, the gross leasing of office space jumped more than 2.5 times to 27.5 million square feet across six cities, from 10.3 million square feet in the corresponding period of the previous year.
On the market, Ramesh Nair, CEO, Colliers India, said the corporate occupiers shrugged off major uncertainties they had over the last two years and are now going ahead with major expansion plans.
“At the same time, developers are grappling with the after-effects of soaring inflation resulting in higher cost of construction amidst global supply chain disruptions in the timely procurement of materials,” he said.
The combined effect of surging demand and limited new supply has led to a dip in vacancy for the first time after 10 quarters, Nair said.
The average vacancy of office space stood at 17 per cent at the end of June quarter from 18 per cent in the previous quarter.
“We could see a situation wherein 10-15 per cent of the planned projects may be pushed ahead as developers are exploring innovative ways to tide through these challenges,” Nair said.