Outlook 2023 India
KEY MESSAGES BRISBANE KOLK TA
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.
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