1 min read.Updated: 13 Sep 2021, 10:06 AM ISTLivemint
Of 21.32 million square feet (msf) net absorption in FY21 across the top seven cities, Bengaluru, Chennai & Hyderabad accounted for a 66% share, followed by West (MMR & Pune) with 21% & North (NCR) with 11%
Cities located in southern India have benefited from the upbeat performance of the IT sector amid increased thrust on digital transformation and cloud adoption as covid-19 forced people to work from home.
According to Anarock Property Consultants, of 21.32 million square feet (msf) net absorption in FY21 across the top seven cities, Bengaluru, Chennai & Hyderabad accounted for a 66% share, followed by West (MMR & Pune) with 21% & North (NCR) with 11%.
In FY18, 31.15 mn sq. ft. of office space was leased in the top seven cities. Of this net absorption, the Southern cities collectively accounted for 47%, the Western region 33% and the Northern region 17%.
In terms of new office supply too, southern cities continued to ramp up their share -- from 40% in FY18 to nearly 63% in FY21. Of the total new office space completion of 40.25 mn sq. ft. in FY21 across the top 7 cities, the southern cities had a 63% share (around 25.55 mn sq. ft.). The office supply share of the main western markets shrank to just 19% in FY21 (from 40% in FY18.)
Anuj Puri, Chairman - ANAROCK Group says, "The remarkable growth in the office market of these three Southern cities when viewed against their Western and Northern counterparts is directly attributable to robust demand by the IT/ITeS sector, affordable rentals, and the exponential growth of start-ups locally over the past few years. The manufacturing and industrial sectors are also driving demand here."
Notably, between FY18 and FY21, office rentals in each of the southern cities have also shown double-digit growth. In this period, office rentals in NCR remained more or less stagnant while MMR and Pune saw a mere 2% and 8% rental growth respectively, showed the Anarock research.