Mumbai touches all-time high in office leasing: report

Mumbai: Propelled by strong growth in the fourth quarter, the area leased out as office space in the Mumbai metropolitan region (MMR) in 2023 touched an all-time high at 10.1 million square feet (sqft), up 51% from 2022. Office leasing in the top six cities in India including Mumbai too touched a new high in 2023 at 62.3 million sqft, up 12% from 2022, according to a research report by international real estate advisory firm Savills India.

Mumbai witnessed the highest growth in gross office absorption, leaping from 6.7 million sqft in 2022 to 10.1 million sqft in 2023. Hyderabad witnessed 34% year on year growth, from 6.4 million sqft to 8.6 million sqft, while Chennai witnessed a 32% growth, from 7.3 million sqft to 9.6 million sqft, the report said.

“The rise in leasing in Mumbai can be partly attributed to absorption of spaces committed to prior to 2023. It is also due to spaces in buildings completed in 2022 and 2023 being absorbed, especially in micro markets like central Mumbai and the western suburbs like Malad,” a Savills spokesperson said.

Bengaluru continued to dominate leasing activity in 2023, topping the charts at 15.6 million sqft. But, its gross absorption fell 10% from 17.3 million sqft last year. This was due to a 15% year-on-year decline in leasing activity by tech occupiers, the report said.

In the MMR, the banking financial services and insurance (BFSI) sector and the engineering and manufacturing sector continued to drive demand, leasing 47% and 9% of office space, respectively.

“Leasing by BFSI occupiers was concentrated in the micro markets of western suburbs II (beyond Andheri) and Navi Mumbai. In absolute terms, leasing by BFSI occupiers registered a year-on-year increase of 85%, while leasing by engineering and manufacturing occupiers registered an increase of 84% year-on-year,” the spokesperson said.

“The Indian office market has seen an all-time high leasing in 2023, reversing the tides of subdued demand till six months ago. Mumbai and Chennai hit their peaks, as the second half of 2023 recovered strongly compared to the trailing 12 months (June 2022-June 2023). The renewed confidence of the markets bodes well for the industry as well for the economy, especially as we tread into a year of major democratic elections, in India as well as the US,” said Anurag Mathur, CEO, Savills India.

“India’s gross absorption is at an all-time high at 62.3 million sqft, with the last quarter contributing one-third of the overall demand. The year has beaten forecast estimates, which indicates a sustained recovery on the back of high economic growth and strong fundamentals,” said Arvind Nandan, managing director, research and consulting, Savills India.