Net absorption jumps 70% q-o-q

• Gross leasing was down q-o-q, but expansion-driven space take-up continued to drive the office market towards healthy numbers. Gross leasing in H1 2024 stood at around 4.0 million sq ft, second only to the peak-H1 numbers seen last year.
• Demand was driven by IT occupiers with 38%, followed by Flex with 25% and Manufacturing/Industrial with 16%. Net absorption jumped by 70% q-o-q, with the SBD accounting for 75% of Q2 numbers.

Completions in Q2 total 0.7 million sq ft

• Two new projects, L&T Innovation Campus – Tower 1 and Dadha Chambers in the SBD and CBD submarkets, respectively, were completed in Q2, adding 0.7 million sq ft to the city’s office Grade A stock. The former was 100% pre-leased.
• In total, we expect around 3.8 million sq ft of supply in 2024, of which 37% has already come on stream. The city’s vacancy declined by 70 bps q-o-q to 9.5%, the lowest in 15 quarters.

Overall rents up 1.2% q-o-q

• Rents on an overall basis rose by 1.2% q-o-q, nearly at the same pace seen the previous quarter. The highest rent growth was seen in PBD West, with declining vacancy in a key asset pushing rents up by 5.9% q-o-q here.
• Rents also rose by 2.2% q-o-q in SBD OMR. Capital values kept pace with rent growth, keeping yields steady.

Outlook: Robust demand to keep premium assets in high demand

• Strong demand for space, existing pre-commitments and ongoing deals are likely to result in healthy net absorption numbers over the next 12–18 months. Occupiers across IT, Flex, Manufacturing and BFSI remain the most active.
• Supply totalling 9 million sq ft is lined up for 2024–25 with PBD OMR and SBD submarkets accounting for over two-thirds. While SBD and SBD OMR will remain office hotspots, PBD OMR is poised to attract significantly higher demand in upcoming quarters.