Office and Industrial demand have gained momentum led by economic revival, says Ramesh Nair

NEW DELHI, July 30 (The CONNECT) - Realty rentals are likely to firm up in some markets by the end of 2022, led by an upswing in occupancy levels, according to a study.

Tech and Flex occupiers continue to lease large spaces while demand from consulting and BFSI firms surged while Third Party Logistics was the largest demand segment at 60% share, followed by Automobile at 13%, says Real Estate Quarterly Q2 2022 report by Colliers.

Leasing was led by large deals (>1,00,000 sq ft), which accounted for 75% of the total leasing in H1 2022 and vacancy levels are likely to remain rangebound amidst limited supply and robust demand  

Ramesh Nair, CEO, India & MD, Market Development, Asia at Colliers, said “While 2021 was the year of recovery, 2022 has been the year of unparalleled growth. Office and Industrial demand have gained momentum led by economic revival and increased occupier confidence.”

“We are witnessing healthy leasing across office and Industrial assets through large sized deals, which contributed to half of the total office leasing and two third of the total warehousing leasing during the quarter. As occupiers fast-track their hiring and portfolio expansion plans, we might see an uptrend in rentals in the coming quarters, along with a dip in vacancy levels,” Nair said.

Gross absorption was noted at 14.7 mn sq ft during Q2 2022, a three-fold increase from Q2 2021.

Bengaluru, Hyderabad, and Delhi-NCR accounted for almost 64% share in overall leasing during Q2 2022 

“While we expect supply pipeline to be in tandem with pre-commitments in the market, we foresee some postponement of supply as developers grapple with rising costs,” the report said.   

Vacancy levels declined by a strong 100 basis points during Q2 2022 to 17.0% led by a revival in demand across all markets 

Office assets remain the preferred choice of investment for capital investors accounting for 42% of the investment inflows in Q2 2022  

Investments in alternative assets witnessed a 4X increase in Q2 2022, compared to the same period last year 

Domestic investors are back in the market with 44% share in Q2 2022, a strong rebound from 10% share in Q2 2021 .