Office space leasing in Delhi-NCR drops 54% in Apr-Jun, 30% fall in Jan-Jun on low demand: CBRE

New Delhi: Delhi-NCR has witnessed a 54 per cent decline in its gross leasing transactions of office space during April-June period at 1.9 million square feet amid global economic uncertainties, according to realty consultant CBRE.

The gross absorption of office space stood at 4.1 million square feet in the year-ago period.

During January-June period, the leasing transactions in Delhi-NCR fell 30 per cent to 4.4 million square feet from 6.3 million square feet in the corresponding period of the previous year.

On Friday, CBRE South Asia released its latest office report 'CBRE India Office Figures Q2 2023', showing an overall 25 per cent dip in leasing across nine major cities to 13.9 million square feet during April-June from 18.5 million square feet in the year-ago period.

During January-June period, the demand across these nine cities fell 12 per cent to 26.4 million square feet from 30 million square feet in the corresponding period of the previous year.

These nine cities are -- Delhi-NCR, Mumbai, Chennai, Kolkata, Bengaluru, Pune, Hyderabad, Ahmedabad and Kochi.

Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, said, "India is expected to be amongst the world's fastest-growing economies amidst a likely weakening of global macroeconomic conditions. We believe that the share of domestic firms in leasing would also remain strong during the year; at the same time, their greater emphasis on return to offices (RTO) is also expected to boost their operations."

He noted that concerns of office space occupiers regarding global macroeconomic headwinds would persist in the short term.

"Nonetheless, favourable demographics, a high-skilled and cost-effective talent pool, robust technology and startup ecosystems, availability of high-quality office spaces at sub-dollar rentals, and beneficial government policies would continue to drive corporates' real estate portfolio expansion in the medium to long term in India," Magazine said.

Commenting on the trend, Gagan Randev, Executive Director, India Sotheby's International Realty, said, "Although the office market has been affected by economic challenges in global economies, there is good support from domestic companies."

Many conglomerates are now embracing flex-office spaces due to the hybrid work model, minimal capital expenditure required, and the flexibility these spaces offer, he said.

Consequently, Randev said, there is an increasing demand for such office spaces. This trend has resulted in low vacancy rates for flex-office space operators.

Mukul Sharma - Head Corporate leasing, Advance India Projects Ltd (AIPL), said the demand for Grade-A office space from domestic firms as well as MNCs remains buoyant.

In January-June period, technology companies held the highest share in leasing activity at 24 per cent, followed by BFSI firms (20 per cent), flexible space operators (20 per cent) and engineering and manufacturing firms (14 per cent).