Average office rental fell by up to 6 per cent year-on-year during the December quarter in Mumbai, Chennai, Hyderabad and Kolkata on lower demand for workspace amid the COVID pandemic, while it remained stable in Pune and Delhi-NCR, according to Vestian.
In its quarterly newsletter – The Connect Q4 2021, property consultant Vestian mentioned that the rental rose marginally by 1 per cent in Bengaluru as the office demand in the city remained strong from the IT companies.
There were no major changes in rentals across seven cities during the October-December period compared with the previous quarter.
According to the data, the weighted average rental value fell 6 per cent in Kolkata to Rs 45 per sq ft a month during October-December 2021 as compared with the year-ago period.
The average monthly rental value in Mumbai dropped 4 per cent to Rs 120 per square feet, while Chennai saw a 3 per cent dip to Rs 57 per square feet.
The weighted average rental value in Hyderabad declined 2 per cent to Rs 61 per square feet.
Office rentals in Pune and Delhi-NCR remained stable at Rs 70 and Rs 65 per square feet, respectively.
“While the first two quarters of the year 2021 saw a cautious office market, with the second pandemic wave impacting occupier decisions, the succeeding quarters saw the market bounce back favourably owing to pent-up demand and strategic growth plans of large corporates,” the report said.
However, the rise of Omicron variant at the year-end led the market to observe relative restraint, it pointed out.
As per the report, gross office space absorption across these seven major cities rose 8 per cent to 39.61 million square feet in 2021.
New office supply grew 20 per cent to 39.25 million square feet. Bengaluru continued to lead the way with 28 per cent share of the total absorption in these seven cities, followed by NCR and Hyderabad at 18.4 per cent and 17.6 per cent share, respectively.
The IT/ITeS sector continued to be the major demand driver of office absorption, though the year saw its share softening by a fair margin.
The co-working/managed office space segment, on the other hand, strengthened substantially in 2021, accounting for 15 per cent of the total absorption.
US-based Vestian has presence in Indian market and is one of the leading property consultants in India.