New supply of office space down 25% in Apr-Jun in top 7 cities; NCR, Mumbai see steep fall: Vestian

New Delhi: New supply of office space fell 25 per cent to 11.30 million square feet during April-June across seven major cities amid subdued demand and high base effect, according to Vestian.

Bengaluru-based real estate consultant Vestian recently released its quarterly office market report, which showed that the total office leasing across the seven cities fell 6 per cent to 13.9 million sq ft during April-June against 14.8 million sq ft in the year-ago period due to delays in decision-making by large domestic firms and MNCs amid global uncertainties.

"New completions (of office space)  registered a decline of 25 per cent in Q2 2023 over the same period a year earlier due to the base effect," Vestian said in the report 'The Connect Q2 2023'.

The consultant noted that new completions demonstrated a significant upturn, rising from 8.60 million sq ft in January-March this year to 11.30 million sq ft in June quarter.

"The increase in new completions effectively stopped the consecutive decline witnessed over the past three quarters, indicating a positive sentiment across the construction sector," Vestian said.

As per the data, Bengaluru saw 21 per cent decline year-on-year to 3.5 million sq ft during April-June period of this calendar year.

New supply of office space in Chennai rose 75 per cent to 2.10 million sq ft.

In Kolkata, there was no new supply in June quarter.

In Hyderabad, new supply fell 9 per cent to 4.10 million sq ft.

Mumbai too saw a 86 per cent fall in new supply to 0.30 million sq ft.

New supply of office space in Pune dropped 56 per cent to 0.80 million square feet.

In Delhi-NCR, the new office space supply was down 79 per cent year-on-year to 0.50 million square feet during April-June.

"Hyderabad witnessed the completion of several large office buildings during the current quarter, registering new completions of over 4 million sq ft.

While Hyderabad accounted for 36 per cent of the overall supply in Q2 (April-June) 2023, Bengaluru followed with a 31 per cent share.

"Absorption surpassing new completions led to a reduction of 60 basis points in overall vacancy levels during the current quarter. Currently, average vacancy stands at 15.5 per cent," Vestian said.