Strengthening business confidence, stabilizing global concerns and an optimistic economic outlook are likely to infuse confidence into occupiers, steering net office absorption across the top eight cities by up to 10% to 32.5 msf in 2017, the highest seen in the last six years. Net absorption will gather pace in last quarter of this year and is expected to close around 30 msf driven at the end of 2016 and is expected to continue to gain momentum for the next 4 years as per the latest report by Cushman & Wakefield and GRI entitled “REVITALISING INDIAN REAL ESTATE: A new era of growth and investment” launched during GRI India Summit 2016.

Supply of approximately 45-46 msf, a 26-28% increase is expected across the top cities in 2017, which would cater to the strengthening demand from sectors such as IT-BPM and BFSI. With better regulatory environment expected next year onwards, developers should be able to step up the pace of construction of new office spaces as demand from occupiers is expected to remain strong on the back of an encouraging business environment.

Anshul Jain, Managing Director, India Cushman & Wakefield said, The year 2016 saw stable demand similar to previous years and is expected to close at approximately 30 msf. Additionally, the gross absorption is expected to be at circa. 41 msf by the end of 2016 on account of consolidation and renewals further demonstrating confidence of the corporates on the economic growth of India. This was despite the external conditions such as uncertainty on account of Brexit vote and a change in the US president-elect. In a steadier environment, as expected in 2017 occupiers would gain greater confidence to take investment and expansion decisions. We anticipate net absorption cumulative annual growth to be at 3% until 2020, which is higher than the growth seen in the last five years. Hyderabad and Pune are markets to watch out for with supply and absorption levels expected to exceed that of the next four years,”

The year 2017 would also herald a period of office sector wherein the pecking order changes. While Bengaluru will continue to be the premier market (accounting for 32% share) in 2017, Hyderabad (18% share) is expected to surpass Delhi-NCR (15% share) for the first time ever to record the second-highest absorption levels. The traction in demand in both Bengaluru and Hyderabad will be led by the IT-BPM sector. Both these cities have received notable pre-commitments over the last two years, which would be catered well by the higher supply expected in both these cities.

Bengaluru is likely to see 16% higher supply in 2017, while supply in Hyderabad is expected to increase by 36%. Besides, IT-BPM companies, Bengaluru would also see BFSI and e-Commerce companies taking up office spaces. The Outer Ring Road submarket is likely to see the maximum demand, followed by the Whitefield submarket.  In Hyderabad, IT-BPM, pharmaceuticals and healthcare companies would steer demand with Madhapur and Gachibowli submarkets continuing to see majority of the leasing activity.

Delhi-NCR is likely to be placed third in terms of net absorption in 2017, with maximum demand seen in Gurgaon-Other submarket (excludes DLF Cybercity, MG Road and Golf Course Road markets) and Noida-Greater Noida. Pune is likely to be close on the heels of Delhi-NCR, with SBD-East submarket (includes Kalyani Nagar, Kharadi, Mundhwa, Yerwada, Nagar Road, Viman Nagar, Hadapsar, Kondhwa) reigning over the others in terms of net absorption.

Mumbai is expected to see a decline in cumulative demand in the forthcoming period of 2017 – 2020 estimated to be 12.7 msf as compared to 2012- 2015. This will be largely be due higher rental values in the city making it less attractive for the IT- BPM sector in the coming years. Majority of the demand will be concentrated in the sub-urban and peripheral locations of Thane – Belapur Road driven by the IT- BPM sector while corporate office preference would be largely concentrated in the SBD location of Bandra Kurla Complex.


The cumulative net absorption during the next four years (2017-2020) is likely to be 23% higher than that seen in 2012-2015. The four-year period is expected to see net absorption of 133 msf across the top eight cities, with supply slated at 156 msf. These four years also mark a shift in the ranking of cities in terms of net absorption. Bengaluru will continue to be the numero-uno market, with Hyderabad on its heels. These two cities would be followed by Delhi-NCR and Pune.  

Hyderabad is expected to witness the highest Grade A supply of 37 to 40 msf over 2017-2020 as developers bet on the IT-BPM sector’s expansion to steer future demand.  Several planned and implemented infrastructure and commercial development projects across the city such as the Transit-oriented growth corridor, Information Technology Investment Region (ITIR), the Hyderabad metro, are expected to give Hyderabad a competitive edge over other cities in the medium term. Hence, in light of such measures, Grade A inventory is expected to double in next 4-5 years, with majority (almost 60%) of it catering to the IT sector.

Besides Hyderabad, construction activity in Bengaluru too is likely to be robust with 34-38 msf of supply likely to be delivered in next 4-5 years, with majority comprising of commercial office developments. The IT-BPM sector will continue to be the major demand driver in Bengaluru, apart from continued demand from the consulting and BFSI sectors.  Delhi-NCR is expected to witness 25-30 msf of new office space between 2017 and 2020, with majority of the space expected to come up in Gurgaon which has seen maximum demand from occupiers over the years.