India Records Strong First Quarter Office Absorption; Witnesses 8% Increase Over Q1, 2016: CBRE

IT/ITeS continues to lead leasing activity followed by Engineering & Manufacturing and BFSI

New Delhi, April 6, 2017: CBRE South Asia Pvt. Ltd, India’s leading real estate consulting firm, today announced the findings of its latest India Office MarketView Report – Q1, 2017​. According to the report, the first quarter of 2017 was one of the strongest quarters for the office market observed in recent years, with close to 8 million sq.ft. of office space take-up recorded across key cities in the country. This is an 8% increase over Q1, 2016. Leasing activity was led by small to mid-sized deals (<50,000 sq. ft.) accounting for almost 90% of all transactions in Q1 2017. ​

During the quarter, leasing activity was led by the Delhi National Capital Region (NCR) with a share of 19% of total transacted space, followed by Mumbai (18%) and Bangalore (18%), accounting for over almost 55% of the transaction activity across leading cities. Transaction activity continued to be driven by IT/ITeS corporates, garnering a share of close to 37% of overall space leased during the quarter. However, the share of other sectors such as Engineering & Manufacturing as well as the BFSI segments, rose marginally, accounting for 39% in the overall space leased during the quarter. Additionally, co-working operators continued to remain active, leasing entire recently completed developments in Mumbai and Bangalore.

Commenting on the findings of the report, Anshuman Magazine, Chairman –India & South East Asia, CBRE said, “The commercial real estate market in India continues to exhibit strong performance. We have begun the year on a strong note, with key markets recording significant office space demand. Despite global uncertainties, the various policy initiatives (RERA, GST, Infrastructure Status for Affordable Housing) coupled with a robust infrastructure development roadmap, is making the country an attractive destination for corporates looking to start up or expand operations in the country. The emergence of smaller cities for corporate expansion is also contributing to the overall growth of the segment.”

Ram Chandnani, Managing Director – Advisory & Transaction Services, CBRE South Asia Pvt. Ltd. said, “The first quarter of the year has set the tone for the office segment across key cities.  We expect commercial activity and occupier demand to remain steady in the coming months. With space constraints in core micro-markets, we are noticing corporates shifting towards peripheral/sub-urban locations which have adequate supply of quality space. While planning their expansion strategies, corporates will continue to keep cost effectiveness, current social and infrastructure development and overall long term benefits of a location in mind before expanding.  With the concept of co-working spaces gaining prominence among start-ups and established corporates, we expect new office spaces to embrace this concept in their future designs.”


City Highlights – Q1, 2017

National Capital Region

  •  Gurgaon continued to drive leasing activity
  • Supply addition was limited to Gurgaon
  • IT/ITes corporates dominated leasing activity with a share of more than 35%, followed by BFSI and research, consulting and analytics firms
  • Marginal rise in rentals witnessed across SEZ developments


  • City witnessed a decline in leasing activity during the quarter
  • Thane and Navi Mumbai account for more than 45% of total transaction activity
  • New supply came into Airoli, Goregaon, Kurla and Andheri


  • 80% of total demand witnessed from ORR, CBD and NBD
  • Engineering & Manufacturing, IT/ITeS and BFSI segments were the main occupiers of space in the quarter


  • Leasing activity witnessed an increase on a quarterly basis
  • IT Corridor and Extended IT Corridor dominated leasing activity


  • Low vacancy levels led to a marginal dip in transaction activity
  • Rentals continued to appreciate across most micro-markets
  • 50% of the transaction activity during the quarter was concentrated on OMR Zones and CBD


  • The city witnessed a 3 time rise in leasing activity in Q1 2017 on a y-o-y basis with a 14% share.
  • Rental growth of 2 - 4% q-o-q.
  • On the supply front, 19% of the entire supply for the quarter was recorded in the city


  • Leasing activity was concentrated in IT developments in the peripheral micro-markets
  • Rentals remained stable across micro-markets
  • BFSI companies dominated leasing activity, followed by domestic engineering & manufacturing and IT/ITeS firms


  • Transaction activity witnessed an increase on a quarterly basis
  • 80% of the leasing activity was concentrated in the SBD
  • An increase in rental values witnessed in the CBD

During the quarter, 3.1 mn sq.ft. of new supply entered the key markets. Most of this supply is concentrated in peripheral locations of leading cities, which is likely to attract enhanced enquiries and strong pre-commitment activity in the coming months. Going forward, a significant quantum of space is expected to be released in the decentralized locations of leading cities over the next few quarters. Overall demand for office space is expected to remain strong during the year with RERA and REIT’s having a positive impact on the market.



Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.

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CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at​