India’s office leasing grew at 36 per cent year-over-year in 2022

V Nagarajan

While global headwinds weighed down growth projections for the Indian economy over the course of the year, it was apparent that India would still be the fastest growing large economy during the year.

The central bank’s recent 6.8 per cent growth projection for FY 2023 makes India a beacon of growth across the Asia-Pacific region and the world at large.

The Indian office space market has concluded 2022 with a significant 36 per cent year-over-year (YoY) growth in transaction volumes and a 28 per cent year-over-year growth in completions.

The 51.6 million sq ft transacted during the year is second only to the 60.6 million sq ft recorded in 2019 in terms of annual transacted volumes, according to Knight Frank India survey.

Transaction volumes in Mumbai and Chennai grew the most at 59 per cent and 29 per cent YoY respectively during the period. Bengaluru with 6.8 million sq ft, constituted 26 per cent of the area transacted.

Mumbai’s ranking in terms of office space consumed in every half yearly period has dropped significantly since the advent of the pandemic. This can be attributed in part to new-age, tech-enabled occupiers opting to initiate operations or expand

in lower priced office markets today. The BFSI sector, which is the mainstay of the Mumbai office market, also has not seen any increase in its annual transaction levels since pre-pandemic times.

In contrast, co-working and other services sector have seen significantly higher demand levels.

The other services sector, which include e-commerce, education, healthcare and logistics companies among others, took up the most office space at 30 per cent or 7.9 million sq ft of the total space transacted during the period.

The IT sector was the second most prolific sector during H2 2022 accounting for period since H1 2019 that this has occurred.

Bengaluru and Pune office markets grew the most during H2, 2022 at 11 per cent and 7 per cent year-over-year respectively.

While direct leasing by the IT sector was subdued, it was a strong driver for the co-working/managed office sector’s transactions during the second half (H2) of 2022.

The share of the sector in total transactions increased to 21 per cent in H2, 2022 from 18per cent in H2 2021. 125,000 seats were taken up in managed office premises in 2022, a 49per cent growth in year-over-year terms.

The occupier’s perspective of office space as an enabler of productivity rather than just an asset continues to solidify and favours the increasing consumption of coworking premises as they are acknowledged as experts in the domain of workspace delivery.

Office completions also staged a recovery in line with transactions, growing to 25.3 million sq ft which is the highest since the onset of the pandemic and second only to the 37.5 million sq ft reached in H2 2019. Bengaluru, along with Hyderabad, made up a massive 62 per cent of the total office space coming online during the period.

Rental levels were stable or grew across all markets in the second half (H2) of 2022.

The strong resurgence in office demand despite the significant macroeconomic challenges seen this year, is a testament to the strength of the Indian office space market.

I am selling the existing flat and investing in a larger apartment. What is the exemption from long term capital gain available? Is there any timeline during which it has to be completed? Please clarify. Sathikumar, Dubai.

You can claim exemption from long term capital gain (LTCG) if the amount of capital gain is utilised for purchase of new larger apartment within two years after the sale of the existing flat.

In case the amount is not utilised it shall be deposited in a separate account called Capital Gains Account Scheme.

Long term capital gains can be computed by deducting the indexed cost of acquisition and any expenses incurred on transfer from sale price.

 A number of corporate developers are now undertaking land development projects. I intend investing in such projects. Are NRIs eligible for plot loans and what are the terms and conditions? Prakash Dhorda, Sharjah.

Yes. NRIs and PIOs are eligible for plot loans. The lending rate may be slightly higher than for buying homes which is 8.35 per cent and above depending on the institution and repayment period.

Some institutions provide 75 per cent of the cost of the plot as loan for a 15-year repayment period. A few institutions may insist that a house should be built on the plot within the prescribed period.