Whenever the economy experiences tectonic changes, the important estate markets are affected, but at a lag of 10-12 months. Corporate occupiers take that long to figure and re-align their brick-and-mortar strategies to support how their business is shaping up.
Now that a year has passed since the pandemic hit India, it’s the proper time to see how commercial land markets have fared and which markets have remained resilient whilst the economy contracted. to know this better, Savills India evaluated a number of the office markets across major cities on some critical criteria that included rental changes, absorption trends vis-à-vis supply, vacancy levels, and submarket size. the standards were applied piecemeal to place together an inventory of the foremost resilient markets.
The market that persisted resilient during the economic slowdown:
In the last 12 months, many corporates have re-evaluated their land strategy with Work From Home (WFH) and Work From Anywhere (WFA) cultures taking precedence. Office land had never witnessed such a paradigm shift ever. Some office locations in Mumbai and Pune also witnessed a marginal increase in rentals. Besides, new demand was above the fresh supply in these markets. The important estate sector was within the gloom, demand and delivery of projects remained strong in a number of the above locations.
Another important aspect is that the vacancy level. Most of them had vacancy levels but 10%, a transparent indication of the continuing robust office demand in such places.
These latest office market listings remained unwavering within 12 to 18 months ago:
#Bengaluru: Out of Jump (ORR)
#Hyderabad: The city locations of Gachii, Tinamatukrakrauda, and Manikonda
#Mumbai: The Oriental along the Marg MON includes Powai and Vikhroli
# Pune: (1) TheSilasila of camp, Drink Garden Road, Shivaji Nagar, Kalyani Nagar, Yerawada
(2) East of view, Viman Nagar, Nagar Road, Hadapsar, Kodhwa
Some markets like Gachibowli in Hyderabad and ORR in Bengaluru are magnets for corporates for an extended time. However, once you check out markets from Pune and Mumbai, there are some unexpected submarkets. Watching the picture, it appears that the majority of the resilient markets are within the suburbs, where demand is primarily driven by the technology sector.
The trend also approves that corporates are taking office spaces closer to where employees live. this may become a norm post-pandemic as employers adopt agile workplace culture. The list of resilient markets provides developers and institutional landlords cues on where to expand their portfolios, which they ought to check out business parks, tech parks, and integrated townships to cater to the longer term of the workplace.
Lastly, the availability has got to follow the demand, and it appears that if we would like to possess lower volatility in rentals, the Indian suburban markets are a far better bet than the prime inner-city submarkets, especially during the economic slowdown.