Leasing activity maintains momentum

• Gross leasing in Q1 was recorded at 1.9 million sq ft and was largely in line with the quarterly run rate of 2024. IT/ITeS led leasing activity with 35.8%, followed by e-commerce with 24.5% and flex with 13.1%.
• Net absorption was up 50.5% y-o-y, indicating a strong start to the year, driven by PBD OMR, which exhibited a strong performance in the first quarter.

Vacancy down by 130 bps q-o-q

• With no new supply in Q1 2025, vacancy dropped by 130 bps q-o-q to 6.7%.
• Vacancy across the core markets is in the single digits, indicating solid occupancy in existing stock, with any incoming vacancies being quickly taken up, indicating strong demand momentum in the city.

Marginal increase in rents and capital values q-o-q

• City rents rose slightly by 0.7% q-o-q, with rents rising by 2.0% q-o-q in SBD OMR. This increase was driven by falling vacancy in key properties, pushing rents upward in the submarket.
• Capital values showed minimal change, growing just 0.6% q-o-q. However, they aligned with rent increases y-o-y. Consequently, yields remained steady, reflecting a balanced market where capital appreciation and rental income growth maintained equilibrium.

Outlook: Strong demand and supply additions in the coming years

• Robust demand, pre-commitments and active deals forecast healthy net absorption over the next 12–18 months. The IT, flex and BFSI sectors are expected to drive occupier activity, with demand expected to remain strong.
• Expected new supply of 8.5 million sq ft is lined up over the next 12–18 months, mainly in the PBD OMR and SBD submarkets. While SBD and SBD OMR remain key office areas, PBD OMR is poised for notably higher demand in upcoming quarters.