Reeling under the adverse impact of the Covid-19 pandemic, the absorption of office space across five key cities has declined 65% during the third quarter ended September 2020 as against the same quarter last year.
The five major cities of Bengaluru, Mumbai, Chennai, Hyderabad and Kolkata saw absorption of about 4.11 million sq. feet of office space during Q3 2020. During the same quarter a year ago, these cities had absorbed 11.82 million sq. feet space during the same quarter.
Even with a substantially reduced absorption, Bengaluru continued to lead the way with 36% share of the total absorption in these five cities, followed by Hyderabad at 23%. Mumbai accounted for 21% of the total absorption, whereas Chennai and Kolkata accounted for 1% and 2% share respectively, according to real estate consultancy firm Vestian Global.
"With the pandemic leading to a stringent nationwide lockdown that was initiated in March, it was only a matter of time before the realty sector was impacted adversely, along with all other economic activities," Shrinivas Rao, CEO-APAC, Vestian Global Workplace Services said.
While Q1 2020 saw a cautious office market, with most occupiers uncertain over the course to follow given the singular nature of the event, the succeeding quarters -- Q2 and Q3 -- observed severe constraints in businesses, leading several companies to take up difficult operational decisions, he said.
"Repercussions of the pandemic have today compelled corporates to review their requirements for office space, deferring their decisions on expansion plans and fresh offtake of commercial spaces," Rao said.
Significantly, the new office space completions for Q3 2020 was recorded at 6.8 million sq. feet, depicting a considerable increase of 45% year-on-year, Vestian Global said in a report.
Bengaluru registered the highest supply of 3.5 million sq. feet in Q3 2020, accounting for a lion's share of 51% of the total supply amongst the five cities, followed by Hyderabad with 43% and Mumbai 4% share.
In the residential real estate segment, approximately 10,000 new residential units were launched overall in the top four cities -- Bengaluru, Chennai, Hyderabad and Kolkata -- during Q3 2020. This indicates a 41% decline in the number of launches when compared with the number of units launched in the corresponding quarter of 2019.