HomeNewsLeasing momentum likely to pick up

Leasing momentum likely to pick up

Recently, TCS, India’s largest IT company announced its plans to end work from home soon, asking employees to return to office by November 15. This in fact, reflects the increasing trend in the corporate world in India wherein companies are gradually returning to old form of working and in the process ending the work from home culture.

With ‘return to office’ gaining momentum as vaccination coverage picks up, real estate professionals see a turnaround in the leasing momentum over the next 2-3 quarters. Demand drivers in India remain firmly in place, with strong hiring in the IT sector, amid moderation in new supply since the pandemic. However, real estate analysts add a word of caution – evolution of a Hybrid work culture could lead to a protracted recovery in occupancy levels over 2HFY22-24. According to them, hybrid or flexible workspace culture is likely to stay, offering flexibility to employees especially in the Tech sector and the extent of hybrid work will determine the recovery in occupancy levels in the coming months.

Meanwhile, net absorption for 2QFY22/3QCY21 for top-8 cities has remained muted at 4.3msf (as against 5-year quarterly average of 7-8msf) reveals a Cushman & Wakefield (C&W) report. 9MCY21 absorption at 12.3msf is down 10% YoY (CY21 absorption is also likely decline YoY), vacancy level for industry has gone up by 3.5pps since the start of the pandemic.

According to C&W, globally, 40% employees are back to office (in September), and they expect a majority to return to the office by 1QCY22/4QFY22. In India, REITs and large commercial developers have reported 10-15% physical occupancy in 1Q which might have improved in subsequent quarters.

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