Outlook 2023 India

INDIA

KEY MESSAGES BRISBANE

ENG LURU

SUPPLY

DEMAND

RENTS

 Bengaluru shall continue to remain as a leading KEY OUTLOOK

 Bengaluru is set to witness a record high supply of 13-14 msf in 2022.  Beyond this, ~34 msf of total supply is expected to complete during 2023 -2024, with the Outer Ring Road submarket being the major (>40%) contributor.  Beyond 2024, average annual supply is expected at 11-12 msf.

 Year 2022 is likely to witness a record demand volume of around 14 msf, which would be 2x growth compared to 2021.  2023 and 2024 are also likely to record high net absorption volumes in the range of 12-13 msf driven by rising return to office ratios and demand for quality spaces.  City vacancy is expected to see marginal uptick during 2023 and 2024 on account of high volume of supply.  However, prime submarkets will likely continue to experience tight vacancy levels in the range of 3-5%.

 Rents remained largely unchanged during 2021 and 2022.  As rising demand translates into higher space take-up in the near-to-medium term, rents are likely to resume growth from 2023 onwards.  Upward rental movement will take rents to INR 1160/sft/yr by end 2024.

destination for GCCs not just in India but globally, backed by its existing tech ecosystem, competitive office rentals and large talent pool.

.

BENGALURU NEW SUPPLY

NEW SUPPLY (MSF)

20

 New supply for 2022 is expected to reach 13-14 msf, a historic high supply over the decade.  Supply during 2023 & 2024 is likely to total ~34 msf with the Outer Ring Road submarket accounting for approx. 45-50% of the supply to 2024.  The average annual supply beyond 2024 is expected to range between 11-12 msf.  Future supply might vary slightly with chances of newer projects being announced, particularly in emerging submarkets.

FORECAST

18

16

14

12

10

8

6

4

2

0

2020

2021

2022F

2023F

2024F

2025F

2026F

Source: Cushman & Wakefield

BENGALURU DEMAND & VACANCY

NET ABSORPTION (MSF) AND VACANCY RATE (%)

FORECAST

16

12.0%

 Bengaluru is expected to witness annual net absorption of approximately 14 msf during 2022, a record high demand volume.  This is being driven by new leasing as well as pre-leasing in delivered projects during the year.  2023 and 2024 are anticipated to record high net absorption volumes in the range of 12-13 msf.  Despite healthy demand, considering the quantum of supply expected in 2023 and 2024, vacancy levels are expected to see a marginal uptick in the near term.

14

10.0%

12

8.0%

10

8

6.0%

6

4.0%

4

2.0%

2

0

0.0%

2020

2021

2022F

2023F

2024F

2025F

2026F

Net Absorption

Vacancy Rate

Source: Cushman & Wakefield

RENT (INR/SQFT/YR) AND RENT GROWTH (% PER ANNUM) BENGALURU RENT GROWTH

 Rentals remained largely unchanged (INR 1116/sft/yr) during 2021-2022,with transactions getting signed at pre-Covid rates.  Despite tight vacancy in prime micro-markets of Bengaluru, overall rentals remained stable owing to slow Return-to-Office of employees until mid-2022.  With tight vacancy levels in the prime submarkets to continue, rentals are expected to witness an upward movement from 2023 onwards, though the rate of rental growth may vary.

FORECAST

1,220

2.5%

1,200

2.0%

1,180

1,160

1.5%

1,140

1.0%

1,120

1,100

0.5%

1,080

0.0%

1,060

1,040

-0.5%

2020

2021

2022F 2023F 2024F 2025F 2026F

Rent (INR/SQFT/YR)

Rent growth (%)

Source: Cushman & Wakefield

KEY MESSAGES DELHI NCR

SUPPLY

DEMAND

RENTS

KEY OUTLOOK

 Annual average supply of around 8 msf is expected in Delhi NCR during 2023 and 2024, mainly in Golf Course Extn., NH-8 and Noida Expressway submarkets.  Over 19-20 msf of new supply is expected in the NCR market post-2024 through 2026.

 Net absorption has rebounded sharply from levels seen in 2021 and is expected to double to ~5.5 msf in 2022.  Despite average net absorption levels of approx. 5 msf between 2022 and 2024, vacancy is likely to increase marginally and reach 29% by 2024 driven by new supply volumes.

 Rentals are expected to witness marginal growth (0.7%) during 2023 & 2024.  Rental growth is expected to remain range-bound (1-1.5%) post-2024 as demand is expected to be offset by large new supply volumes.  Rents are likely to rise from INR 938/sft/yr as of end-2022 to INR 951/sft/yr by end-2024 and subsequently to INR 973/sft/yr by 2026.

 The Delhi-NCR office market is likely to benefit from growth in IT-BPM, GCCs and flexible space operator segments, all of which have demonstrated high growth in recent years and is likely to grow further. .

DELHI NCR

NEW SUPPLY

NEW SUPPLY (MSF)

12

 NCR is expected to witness new completions of around ~16 msf from 2023 to 2024.  Under-construction projects are located mostly across Golf Course Extension Road in Gurugram and near Expressway region in Noida.  The upcoming years post-2024, are also expected to witness robust supply with approximately 19-20 msf space coming up during 2025 2026.

FORECAST

10

8

6

4

2

0

2020

2021

2022F

2023F

2024F

2025F

2026F

Source: Cushman & Wakefield

DELHI NCR

DEMAND & VACANCY

NET ABSORPTION (MSF) AND VACANCY RATE (%)

FORECAST

6

35.0%

 Net absorption during 2022 (5.43 msf) is likely to double that achieved in 2021. With an increase in hiring plans and return to office ratios, recovery in office demand has gained momentum in 2022.  Demand is expected to pick up further over the next few years with the IT-BPM sector expected to remain a key driver for leasing activity in the NCR market.  Despite steady demand levels in the market even post 2024, vacancy is expected to increase marginally with respect to higher supply entering the market.

30.0%

5

25.0%

4

20.0%

3

15.0%

2

10.0%

1

5.0%

0.0%

0

2020

2021

2022F

2023F

2024F

2025F

2026F

Net Absorption

Vacancy Rate

Source: Cushman & Wakefield

DELHI NCR

RENT GROWTH

RENT (INR/SQFT/YR) AND RENT GROWTH (% PER ANNUM)

FORECAST

980

1.5%

 Rentals are yet to recover from the drop recorded during COVID years.  With annual average supply of around 8 msf expected during 2023 and 2024, rentals are expected to witness marginal average growth (0.7%) during these years.  Beyond 2024, rent growth is expected to pick up (1-1.5%) due to rising occupier demand, though higher supply will continue to limit the rate of rental growth.

1.0%

970

0.5%

960

0.0%

950

-0.5%

940

-1.0%

930

-1.5%

-2.0%

920

2020

2021

2022F 2023F 2024F 2025F 2026F

Rent (INR/SQFT/YR)

Rent growth (%)

Source: Cushman & Wakefield

KEY MESSAGES BRISBANE MUM I

SUPPLY

DEMAND

RENTS

KEY OUTLOOK

 Supply is likely to remain

 Net absorption has rebounded from 2021 levels and is expected to reach ~3.0 msf by end-2022.  2023 and 2024 are likely to witness higher momentum with annual average net absorption of 4.5 msf.  Overall vacancy is expected to be largely range-bound

 After a decline during

 Compared to the pandemic years of 2020-21, the current year is likely to witness a rebound in demand as ~3.0 msf of net absorption is likely by end-2022.  Thereafter, demand is likely to rebound further to more than 4.0 msf/yr almost consistently until 2026. .

lower than 2021 at 3.75 msf for full year 2022, although a pipeline of ~12 msf is expected to complete in 2023 and 2024.  New supply is relatively evenly distributed across both prime and suburban submarkets.

pandemic years, rents are likely to witness marginal

growth of less than 1% during 2022-2024 and then plateau.  However, prime markets are expected to record higher growth rates.

between 24-26% over the forecast period, marginally higher than current levels.

NEW SUPPLY (MSF) MUMBAI

NEW SUPPLY

 New supply for 2022 is expected to reach 3.75 msf.  Supply during 2023 and 2024 is likely to total ~12 msf with peripheral submarkets like Thane, Andheri Kurla and Thane Belapur Road accounting for ~60% of the supply.  Supply volume beyond 2024 is expected to rise further with ~15 msf space likely to be added during 2024-2025. Approximately 30% of this supply is at the land stage currently and could see delays in project starts if economic uncertainties persists.

9

FORECAST

8

7

6

5

4

3

2

1

0

2020

2021

2022F

2023F

2024F

2025F

2026F

Source: Cushman & Wakefield

MUMBAI

DEMAND & VACANCY

NET ABSORPTION (MSF) AND VACANCY RATE (%)

FORECAST

6

30.0%

 Driven by BFSI, IT BPM and Professional Service sectors, office space demand has rebounded during the first nine months of 2022 and is set to reach ~3.0 msf by year-end.  2023 and 2024 are likely to witness higher demand momentum with an annual average net absorption of 4.5 msf.  Despite healthy demand, considering the quantum of supply expected In 2024-2025, vacancy

5

25.0%

4

20.0%

3

15.0%

2

10.0%

levels are expected to see a marginal uptick beyond 2024.

1

5.0%

0

0.0%

2020

2021

2022F

2023F

2024F

2025F

2026F

Net Absorption

Vacancy Rate

Source: Cushman & Wakefield

MUMBAI

RENT GROWTH

RENT (INR/SQFT/YR) AND RENT GROWTH (% PER ANNUM)

FORECAST

1,540 1,550 1,560 1,570 1,580 1,590 1,600 1,610 1,620 1,630 1,640 1,650

1.5%

 Following the recovery in demand, rent growth is expected to turn marginally positive at 0.3% in 2022, following a 0.6% decline in 2021.  With improvement in net absorption numbers from 2023 onwards, overall rents are expected to grow at 0.8-1.0% until 2024.  Rental growth beyond 2024 is anticipated to increase to a little over 1% in 2025 before slowing again.

1.0%

0.5%

0.0%

-0.5%

-1.0%

-1.5%

-2.0%

2020

2021

2022F 2023F 2024F 2025F 2026F

Rent (INR/SQFT/YR)

Rent growth (%)

Source: Cushman & Wakefield

CHENNAI

KEY MESSAGES

SUPPLY

DEMAND

RENTS

KEY OUTLOOK

 Chennai is expected to

 Due to improved demand, net absorption is forecast at 2.15 msf as of end-2022, a three fold increase compared to 2021.  Vacancy is expected to increase to around 20.7% in 2023 due to large supply infusions anticipated during the year, despite a ~14% y-o-y increase in net absorption.  With sustained supply during

 Rents are forecast to grow at an annual rate of 0.5-0.7% between 2022-2025, from INR 83/sft/yr by end 2022 to INR 850/sft/yr by 2025.

 South West, Suburban South and Peripheral South markets are likely to remain as prime office locations with enhanced connectivity to the CBD, on completion of Phase 2 of the Chennai metro project.

witness new supply of 12.3 msf during 2023-2024, with the majority of this supply (65%) concentrated in the active submarkets of South West and Peripheral South West.  Nearly 23% of the upcoming space (2.77 msf) over the next

.

two years is pre-committed, mainly by BFSI and IT-BPM majors.

2024, a 2% y-o-y rise in net absorption is projected for 2024 from over 2.45 msf in

2023, largely driven by demand from IT-BPM occupiers.

NEW SUPPLY (MSF) CHENNAI

NEW SUPPLY

8

 Chennai is expected to witness new completions of around 7 msf in 2023.  Upcoming projects in 2023 and 2024 are mainly located in South West and Peripheral South West submarkets, accounting for 65% (7.97 msf) of the supply over these two years (12.1 msf). Upcoming projects completing in the next two years have total pre-commitment of around 23%.  Nearly 5.6 msf of new supply is expected beyond 2024 and this supply volume is likely to increase as additional projects are in the initial stages of planning.

FORECAST

7

6

5

4

3

2

1

0

2020

2021

2022F

2023F

2024F

2025F

2026F

Source: Cushman & Wakefield

CHENNAI

DEMAND & VACANCY

NET ABSORPTION (MSF) AND VACANCY RATE (%)

FORECAST

30.0%

3.5

 During YTD 2022, demand has gained momentum which is evident with increased net absorption recorded during the year.  Net absorption for full-year 2022 is forecast at 2.15 msf in light of sustained demand from IT-BPM occupiers. Fresh demand for space has been on the rise as occupiers move ahead with their expansion plans.  Net absorption is forecast to reach around 2.45 msf in 2023 with higher demand for space anticipated from the IT-BPM sector.  However, vacancy is expected to increase to 20.7% by the end of 2023 due to increased supply levels.

3.0

25.0%

2.5

20.0%

2.0

15.0%

1.5

10.0%

1.0

5.0%

0.5

0.0

0.0%

2020

2021

2022F

2023F

2024F

2025F

2026F

Net Absorption

Vacancy Rate

Source: Cushman & Wakefield

CHENNAI

RENT GROWTH

RENT (INR/SQFT/YR) AND RENT GROWTH (% PER ANNUM)

FORECAST

865

1.2%

 Marginal rental growth of 0.5-0.7% is expected until 2024 as the market is likely to remain tenant favourable with approximately 17 msf of supply to complete during 2022-2024. Rentals are anticipated to reach INR 846 sft/yr at the end of 2024, from INR 835/sft during end 2022.  Rental growth is likely to witness a

860

1.0%

855

0.8%

850

0.6%

845

0.4%

840

0.2%

sharp rise beyond 2025 with declining supply and vacancy levels, when compared to the previous years.

835

0.0%

830

-0.2%

825

-0.4%

820

-0.6%

815

-0.8%

2020

2021

2022F 2023F 2024F 2025F 2026F

Rent (INR/SQFT/YR)

Rent growth (%)

Source: Cushman & Wakefield

KEY MESSAGES BRISBANE HYDERABAD

SUPPLY

DEMAND

RENTS

KEY OUTLOOK

 Hyderabad is expected to witness 16.5 msf supply during 2022, a historic high.  New supply of 28-29 msf is expected in the city’s office market during 2023-2024, with

 Due to ongoing expansions seen in IT-BPM, flexible workspace and professional services sectors, net absorption for 2022 has been forecast at ~6.0 msf.  Net absorption in 2023 and

 Rent growth is likely to remain within 0.2-0.5% during 2023 and 2024, constrained by the large volume of supply.  With lower volume of supply expected beyond 2024, rental growth is likely to pick up marginally at a rate of 1-1.5%.

 Despite rising demand for space among occupiers, particularly from the IT-BPM and flexible workspace sectors, the Hyderabad office market is anticipated to witness a rise in vacancy levels driven by a huge volume of supply over the next two years. .

the majority of this supply (~57%) concentrated in Gachibowli submarket.

2024 is also anticipated to range around 6-6.5 msf.

 Vacancy is expected to increase through to 2024 due to the higher volume of supply.

HYDERABAD NEW SUPPLY

NEW SUPPLY (MSF)

18

 Hyderabad is expected to witness new completions of around 16.5 msf in 2022, a historic high.  Supply of 28-29 msf is expected during 2023-2024, with the majority (~57%) being contributed by the Gachibowli submarket, followed by Madhapur (41%).  Beyond 2024, office supply is expected to decline to an average of 5-6.0 msf per year. However, additional projects are currently in the initial stages of planning.

FORECAST

16

14

12

10

8

6

4

2

0

2020

2021

2022F

2023F

2024F

2025F

2026F

Source: Cushman & Wakefield

HYDERABAD DEMAND & VACANCY

NET ABSORPTION (MSF) AND VACANCY RATE (%)

FORECAST

35.0%

7

 Annual net absorption of 6.0 msf is expected in 2022, driven by ongoing expansions in IT-BPM, flexible workspace and professional services sectors.  Net absorption for each 2023 and 2024 is likely to range around 6-6.5 msf.  Vacancy is expected to rise consistently through to 2024 due to the high volume of supply.  Although net absorption is forecast to slow beyond 2024, vacancy is expected to decline in light of limited new supply.

30.0%

6

25.0%

5

20.0%

4

15.0%

3

10.0%

2

5.0%

1

0.0%

0

2020

2021

2022F

2023F

2024F

2025F

2026F

Net Absorption

Vacancy Rate

Source: Cushman & Wakefield

RENT (INR/SQFT/YR) AND RENT GROWTH (% PER ANNUM) HYDERABAD RENT GROWTH

FORECAST

820

30.0%

 Rent growth is likely to remain within 0.2-0.5% during 2023 and 2024 due to the large volume of supply (28-29 msf) entering the market over these two years.  Rentals are anticipated to range between INR 790-795/sft/yr till 2024.  With the lower volume of supply and declining vacancy levels expected beyond 2024, rental growth is likely to pick up marginally to a rate of 1-1.5%.

815

25.0%

810

20.0%

805

15.0%

800

795

10.0%

790

5.0%

785

0.0%

780

-5.0%

775

2020

2021

2022F 2023F 2024F 2025F 2026F

Rent (INR/SQFT/YR)

Rent growth (%)

Source: Cushman & Wakefield

KEY MESSAGES BRISBANE PUNE

SUPPLY

DEMAND

RENTS

KEY OUTLOOK

 The city is expected to receive new supply of ~8.0 msf in 2022, of which the majority (33%) is concentrated in the prime SBD East submarket.  Total supply of ~17.0 msf is likely to be added during 2022

 Net absorption has seen a sharp recovery from 2021 and is expected to reach around 4.0 msf in 2022.  Backed by healthy demand and consistent supply additions, the vacancy rate is likely to remain stable at around 13% through to 2026.

 Rents are forecast to grow by 1.5-2% y-o-y in 2022 and thereafter witness 1-1.5% growth from 2023 till 2026.  This gradual rental movement will take rents from INR 1,068/sft/yr by end-2022 to INR 1,099/sft/yr in 2024. Subsequently, rentals may reach INR 1,128/sft/yr by end 2026.

 In recent times, Pune’s office market has seen higher interest from institutional developers with an influx of high quality new supply in the city. Most of the Grade A under-construction projects and state-of-the-art business parks, especially in prime SBD East and PBD West submarkets, are attracting institutional investors. .

2024, with SBD East accounting for ~50%.

PUNE

NEW SUPPLY

NEW SUPPLY (MSF)

9

 The city is expected to receive new supply of ~8.0 msf in 2022, the majority of which is concentrated in the SBD East (33%) submarket, closely followed by PBD West with a 31% share.  Total supply of 9.0 msf is expected to become operational during 2023 2024. Again most is located in SBD East (~60%).  Average annual supply of 3-3.5 msf is anticipated post-2024.

FORECAST

8

7

6

5

4

3

2

1

0

2020

2021

2022F

2023F

2024F

2025F

2026F

Source: Cushman & Wakefield

PUNE

DEMAND & VACANCY

NET ABSORPTION (MSF) AND VACANCY RATE (%)

FORECAST

16.0%

5

 Net absorption is forecast to reach around 4.0 msf in 2022 and increase further over the next few years with the IT-BPM and Flexible workspace sectors expected to remain a key driver of leasing activity.  Developers are expediting new projects due to the improvement in tenant enquiries and rising demand for premium office space.  Vacancy will see a marginal dip over the next few years (from 2023) given matching supply and net absorption trends.

14.0%

4

12.0%

10.0%

3

8.0%

2

6.0%

4.0%

1

2.0%

0.0%

0

2020

2021

2022F

2023F

2024F

2025F

2026F

Net Absorption

Vacancy Rate

Source: Cushman & Wakefield

PUNE

RENT GROWTH

RENT (INR/SQFT/YR) AND RENT GROWTH (% PER ANNUM)

FORECAST

1,140

2.5%

 Rent growth is expected to be around 2% by the end of 2022 and the market will continue to remain tenant-favourable.  Due to high demand in SBD East, the select sub-market is likely to boost the city-level rentals in 2023 2024.

1,120

2.0%

1,100

1,080

1.5%

1,060

1,040

1.0%

1,020

1,000

0.5%

980

0.0%

960

2020

2021

2022F 2023F 2024F 2025F 2026F

Rent (INR/SQFT/YR)

Rent growth (%)

Source: Cushman & Wakefield

KEY MESSAGES BRISBANE KOLK TA

SUPPLY

DEMAND

RENTS

KEY OUTLOOK

 New supply of 1.85 msf

 Net absorption has rebounded from the lows witnessed in 2021. It is expected to reach around 0.8 msf in 2022 and breach the 1 msf mark in the subsequent year with the ongoing recovery gaining momentum.  Vacancy is expected to decline to around 26% by 2024 from 28% as of 2022 and then decline further by 2026 with the IT-BPM sector remaining a key driver of tenant demand.  The market is tenant favourable and is likely to remain so in 2023 before moving gradually into neutral territory beyond 2024.

 Rents are forecast to grow by less than 1% in both 2022 and 2023 before accelerating in the subsequent years; however, rental growth will remain in the 1-2% range over 2024-2026 as rising tenant demand is offset by significant new supply.  This movement will take rents to INR 574/sft/yr at the end of 2022 to INR 579/sft/yr at the end of 2023 and subsequently to INR 600/sft/yr by 2026.

 Flight to quality is a key trend witnessed in the Kolkata market. Most of the Grade A, under-construction projects, especially in the prime office corridors Salt Lake Sector V and Rajarhat, are incorporating modern amenities, technology solutions and sustainability features, which are in demand from prominent occupiers. .

expected to enter Kolkata in 2023 across Salt Lake Sector V, Rajarhat and Park Circus Connector micro-markets.  Over 2 msf of new supply is expected in 2025 including expansion of a property owned by Brookfield India REIT.

NEW SUPPLY (MSF) KOLKATA

NEW SUPPLY

2.5

 After a period of no significant new supply, Kolkata is expected to witness new completions of around 1.85 msf in 2023.  The under-construction projects are located across the Salt Lake Sector V, Rajarhat and Park Circus Connector submarkets. A large project at Salt Lake Sector V has secured pre-commitment from a major IT-BPM occupier.  Over 2 msf of new supply is expected in 2025 including expansion of a Brookfield India REIT-owned property.

FORECAST

2.0

1.5

1.0

0.5

0.0

2020

2021

2022F

2023F

2024F

2025F

2026F

Source: Cushman & Wakefield

KOLKATA

DEMAND & VACANCY

NET ABSORPTION (MSF) AND VACANCY RATE (%)

FORECAST

35.0%

1.4

 Recovery in office demand has gained momentum in 2022 with expansion by tenants in the IT-BPM and professional services space. Flexible workspace operators have also accounted for a significant proportion of lease volumes.  Net absorption is forecast to reach around 0.8 msf in 2022 and pick up further in the following year with the IT-BPM sector expected to remain a key driver of leasing activity. Developers have been expediting projects due to rising demand for premium office space and this is likely to result in multi-year high absorption by 2025.  Vacancy is expected to sustain its

30.0%

1.2

25.0%

1.0

20.0%

0.8

15.0%

0.6

10.0%

0.4

5.0%

0.2

0.0%

0.0

declining trend despite higher supply entering the market.

2020

2021

2022F

2023F

2024F

2025F

2026F

Net Absorption

Vacancy Rate

Source: Cushman & Wakefield

KOLKATA

RENT GROWTH

RENT (INR/SQFT/YR) AND RENT GROWTH (% PER ANNUM)

FORECAST

605

1.6%

 Rent growth is expected to be marginal at 0.1% 2022; the market remains tenant-favourable.  With significant new supply of around 1.85 msf entering the market in 2023, rental growth is likely to be restricted as developers look to lease out space to prominent occupiers at competitive rates.  Beyond 2023, rent growth is expected to pick up due to rising tenant demand though higher new supply will limit the margin of growth.

600

1.4%

595

1.2%

590

1.0%

585

580

0.8%

575

0.6%

570

0.4%

565

0.2%

560

0.0%

555

2020

2021

2022F 2023F 2024F 2025F 2026F

Rent (INR/SQFT/YR)

Rent growth (%)

Source: Cushman & Wakefield

KEY MESSAGES BRISBANE AHMEDABAD

SUPPLY

DEMAND

RENTS

KEY OUTLOOK

 2.5 msf of new supply is expected to enter the

 Net absorption in 2022 is expected to reach 1.1 msf, surpassing pre-pandemic levels. Demand momentum is expected to continue in 2023 and 2024 with an average of 1.0 msf of net absorption each year.  Vacancy is expected to drop by around 1% each year from 2022 till 2024, to reach the 30% mark.  Lower supply beyond 2024 is likely to cause a drop in vacancy levels to ~25% by 2026.

 Rents are forecast to grow by around 2.5% between 2022 and 2024, backed by rising demand for quality office space in the city.  This rental movement will take rents to INR 518/sft/yr at the end of 2022 to INR 543/sft/yr by end-2024.

 The city is currently attracting major IT-BPM occupiers supported by the state government’s IT policy, SEZ benefits and talent pool availability. Submarkets such as GIFT City and SBD have been attracting majority of occupiers.

Ahmedabad market in 2023 across submarkets.  Further, 1.1 msf is expected in 2024, followed by an average supply of 0.4 msf anticipated during 2025-2026.

.

AHMEDABAD NEW SUPPLY

NEW SUPPLY (MSF)

5

 2022 witnessed a rebound in supply (3.8 msf) following the pandemic.  New supply of ~3.5msf is expected to enter the market in 2023 and 2024 spread across submarkets.  The Ahmedabad office market is nascent and so supply beyond 2024 is currently uncertain.  Two projects, which are soon to commence construction, are likely to add around 0.6 msf during 2025.

FORECAST

4

3

2

1

0

2020

2021

2022F

2023F

2024F

2025F

2026F

Source: Cushman & Wakefield

AHMEDABAD DEMAND & VACANCY

NET ABSORPTION (MSF) AND VACANCY RATE (%)

FORECAST

40.0%

1.4

 Office absorption has improved significantly in 2022 backed by rising demand from IT-BPM and Flex space operators.  Net absorption is forecast to reach 1.1 msf by the end of 2022 and the momentum is expected to continue for the next few years as the city attracts IT- occupiers, with benefits from the recently announced state IT Policy.  Vacancy is expected to drop by ~1% in 2023, and the downtrend is likely to continue resulting in ~25% vacancy levels by the end of 2026.

35.0%

1.2

30.0%

1.0

25.0%

0.8

20.0%

0.6

15.0%

0.4

10.0%

0.2

5.0%

0.0%

0.0

2020

2021

2022F

2023F

2024F

2025F

2026F

Net Absorption

Vacancy Rate

Source: Cushman & Wakefield

RENT (INR/SQFT/YR) AND RENT GROWTH (% PER ANNUM) AHMEDABAD RENT GROWTH

FORECAST

3.0%

580

 Rental growth is forecast at 2.4% for 2022 and will remain around 2.5% until 2024.  The rental growth is mainly driven by new supply with better amenities and the tenant preference for such quality spaces.  Sustained rental growth (~2.0%) is expected even beyond 2024 with rentals estimated at INR 543/sft/yr by end 2024.

560

2.5%

540

2.0%

520

1.5%

500

1.0%

480

0.5%

460

440

0.0%

2020

2021

2022F 2023F 2024F 2025F 2026F

Rent (INR/SQFT/YR)

Rent growth (%)

Source: Cushman & Wakefield

CONTACTS

RESEARCH: Suvishesh Valsan Head of Research, India suvishesh.valsan@cushwake.com CAPITAL MARKETS: Saurabh Shatdal Co-Head Head of Capital Markets, India saurabh.shatdal@cushwake.com Asia Pacific Dr Dominic Brown Head of Insight & Analysis, Asia Pacific dominic.brown@cushwake.com

TENANT REPRESENTATION: Badal Yagnik Head of Tenant Representation, India badal.yagnik@cushwake.com CAPITAL MARKETS: Somy Thomas Co-Head Head of Capital Markets, India somy.thomas@cushwake.com

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