Gross Leasing moderates as occupiers pause amid uncertainty and supply constraints

• Leasing activity in the quarter was slightly muted with gross leasing volume recorded at 1.69 million sq ft; 59.7% lower q-o-q. However, on a half yearly basis the gross leasing stands at 5.88 million sq ft; up by 17.8% compared to the same period in 2025.
• BFSI sector continued to dominate the gross leasing activity with a share of 29.5%, followed by the flex segment with 23.8% share and IT & ITeS with 20.3% share. 

Net absorption outpaces supply infusion; vacancy down to a 16-year low

• During the quarter, 1.11 million sq ft of supply was delivered, primarily in the Eastern Suburbs and SBD North submarkets, bringing the city’s total stock to 163.8 million sq ft.
• As net absorption continued to outpace new supply, overall vacancy declined by 10 bps q-o-q to 10.8%, lowest in last sixteen years.

Rents strengthen as low vacancy supports rental growth

• Gross rents rose by 1.0% q-o-q and 3.4% y-o-y with supply-constrained submarkets of Eastern Suburbs, SBD BKC, and Western Suburbs leading the quarterly rental appreciation with rise of 1.71%, 1.41%, and 1.38%, respectively.
• Capital values continue to track rental growth, consistent with previous quarters, enhancing market appeal and increased investor interest for both core and value-added opportunities as well as under-construction deals in key clusters.

Outlook: Demand to be sustained by existing pre-commitments; but short-term uncertainty prevails in decision making

• Sustained occupier demand is anticipated from significant pre-commitments in new developments, but ongoing deals are showing some delayed decision-making given the uncertainties from geopolitics and AI impact.
• An estimated 8 million sq ft annual supply is projected in the medium term with net absorption to average 7.5-7.7 million sq ft annually during the same period, driven by BFSI, IT/ITeS, flex, and consulting sectors.