The first half of 2021 has been shaped by the second wave of the pandemic, much against the optimism of initial few weeks, Arvind Nandan, managing director (research and consulting) Savills India, said. “However, despite the slow market during the second quarter and a noticeable annual decline, we estimate that the second half could show some improvement, as vaccinations pick up and occupier confidence returns.”
New Completions Rise
New completions increased marginally by 4% year-on-year to about 18.0 mn sqft, with Bengaluru, Hyderabad, Mumbai and Pune witnessing a rise in new completions compared to the same period last year as deferred supply got completed.
“Bangalore has recorded the highest infusion of new supply constituting a 36% share, followed by Hyderabad and Delhi NCR at 28% and 22% shares, respectively,” it said.
Overall vacancy levels increased to 16.2% at the end of June, as supply addition exceeded the pace of leasing activity, the report said.
“Also, some occupiers optimised their real estate portfolios to an efficient space, spiking vacancy rates in select markets,” Savills India said. “It should be noted that this can be a temporary phenomena in markets which are in a state of flux.”
Large Deals Continue
Sizeable consolidations and expansions have contributed to the share of large deals—exceeding 100,000 sqft—in the first half of 2021, accounting for about 43.2% of the overall pie, while mid-sized occupiers leasing stood at 27.7%, the report said.
Bengaluru witnessed the highest share of large deals at 51%, followed by Delhi-NCR and Hyderabad.
The report said, small-sized occupiers, with spaces less than 25,000 sqft, continued to optimise their portfolios that resulted in 27.7% share of the total office leases in the reported period.