Driven by strong leasing demand from global capability centres (GCCs), the banking, financial services, and insurance (BFSI) sector, and manufacturing industries, net leasing of Grade A commercial offices in India is expected to rise by 10-12%. This fiscal reaching pre-pandemic levels of 41-43 million sq. ft, according to CRISIL Ratings. This increase will help reduce rising vacancy rates, partly due to the denotification of underperforming special economic zones (SEZs), improving cash accruals and credit profiles for commercial real estate entities.
An analysis by CRISIL Ratings shows that net leasing will gain momentum after 4 years of gradual recovery, with high commercial office supply anticipated to continue. GCCs are expected to account for 40-45% of net leasing, bolstered by India’s competitive office rentals and skilled workforce in key cities like Bengaluru and Hyderabad. Despite a projected plateau in vacancy rates at 17.4-17.5%, demand from IT/ITeS firms, engineering, manufacturing, and BFSI sectors will remain strong. The recent SEZ Act amendment, allowing floor-wise denotification, benefits the sector, enhancing cash accruals and strengthening credit profiles. However, economic slowdowns could impact leasing.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
