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India's office leasing market showed a mixed performance in the latest quarter amid global uncertainties. Knight Frank India reported a 6% decline in gross leasing to 17.8 million sq ft in the July-September period, primarily due to a 20% fall in leasing by foreign firms establishing Global Capability Centers. However, cumulative leasing from January to September rose 24% to 66.7 million sq ft. City-wise, Bengaluru and Mumbai recorded declines, while Hyderabad, Chennai, Kolkata, and Ahmedabad saw growth, reflecting varied regional demand and a steady absorption trend that points to a potential record for the year.
Leasing of office spaces in India's top eight cities experienced some slowdown during the September quarter, reflecting uncertainties in the global economic environment. According to Knight Frank India, gross leasing in these cities stood at 17.8 million square feet, marking a 6% decline from the same period last year. Advertisement
A significant factor in the slowdown was leasing by foreign companies for setting up Global Capability Centers (GCCs), which dropped 20% to 5.7 million sq ft from 7.1 million sq ft. Despite this dip in the quarter, total leasing for the first nine months of the year rose 24% to 66.7 million sq ft, indicating sustained demand over the longer term.
Viral Desai, Senior Executive Director at Knight Frank India, said the full calendar year is expected to see gross leasing reach a record 85 million sq ft despite global headwinds. He noted that the quarterly trend shows a sequential decline, highlighting that while demand remains strong, market activity is slowing gradually. Gross leasing in the first quarter of the year was 28.2 million sq ft, which fell to 20.7 million sq ft in April-June and further to 17.8 million sq ft in the latest quarter.
City-wise performance showed wide variation. Bengaluru recorded a 21% decline in office leasing to 4.2 million sq ft during July-September, though the city's total absorption for January-September reached 22.5 million sq ft, growing 63% year-on-year. Hyderabad witnessed a 33% increase in quarterly leasing to 2.9 million sq ft, with cumulative absorption rising 21% to 8.8 million sq ft.
Chennai's leasing grew 9% in the quarter to 2.8 million sq ft, with workspace absorption surging 41% to 7.9 million sq ft for the first nine months. In Delhi-NCR, office leasing fell 15% to 2.7 million sq ft in the quarter, though absorption increased 12% to 9.9 million sq ft. Pune saw a 9% decline in quarterly leasing to 2.3 million sq ft, but cumulative demand for the first nine months rose 7% to 7.4 million sq ft.
Mumbai, the financial capital, experienced a 27% drop in quarterly leasing to 1.9 million sq ft, and total leasing for January-September fell 12% to 7.4 million sq ft. Kolkata recorded strong growth, with quarterly leasing jumping 190% to 0.5 million sq ft and absorption rising 87% to 1.6 million sq ft. Ahmedabad saw a 13% increase in the latest quarter to 0.4 million sq ft, although cumulative absorption for the first nine months declined 41% to 1.2 million sq ft.
Despite the slowdown in some regions, overall absorption trends show resilience, suggesting that businesses continue to expand or relocate operations. The market indicates that while global uncertainties impact short-term leasing decisions, India's office space demand remains robust, driven by both domestic and foreign companies investing in long-term workspaces.
Source PTI
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