| |February 20209by trying to find the right mix of agility within their core workplaces along with adding external flexible options (especially managed spaces). Tech and workplace transformation will continue to be high on occupiers' priorities, thus putting employees at the epicentre of all real estate strategies. Going forward, occupiers are expected to become more conscious about the well-being of their employees, the communities they operate in, sustainability and the broader environment. Occupiers continued to future-proof their portfolios and hedge against future rental escalations by pre-leasing space across various cities. In 2019, more than 20 million sq. ft. of pre-leasing activity was recorded mainly in Bangalore, Hyderabad, Pune and Mumbai.More than 52 million sq. ft. of new office supply added in 2019; led by Hyderabad, followed by Delhi NCR, Bangalore and Pune. In 2019, supply addition rose by about 50% y-o-y to touch 52.4 million sq. ft. The growth in supply additions in 2019 was a result of buildings receiving much-awaited occupation certificates across cities, as well as pre-commitments made in the prior years which came to fruition through 2019. This led to space take-up scaling a historic high. The supply is likely to normalize in 2020, resulting in absorption growth in the coming year to plateau and be in line with the supply.With the office market looking at another strong year in terms of space take-up, rental growth is expected to sustain across most relevant micro-markets for the next few quarters. The real estate sector attracted both institutional investors and developers, with nearly USD 1.2 billion worth of capital being deployed in Q4 2019. Of this, nearly 35% was infused into core office assets across cities such as Hyderabad, Mumbai and Pune.The overall quantum of investment for 2019 reached about USD 5.7 billion, out of which more than 40% was in the office sector. Mumbai dominated investments in office in 2019, followed by NCR and Hyderabad. Investment-grade office assets and land parcels continued to garner the highest share, especially from foreign players. While the former was mostly led by private equity and other institutional investors, the latter was driven by developers aiming at strengthening their presence in cities such as NCR, Chennai and Hyderabad. Developers focusing on expanding their footprint to other key markets across India have also seen momentum, with a few preparing to list Real Estate Investment Trusts (REIT) on the Indian Stock Exchange. India's second such listing ­ known as Mindspace Business Parks REIT ­ is likely to be issued soon, with K Raheja and Blackstone jointly planning to offer about USD 0.42 billion (about INR 3,000 crore) in its initial public offering (IPO).Absorption is expected to be mainly driven by India's position as a preferred outsourcing destination and growing need for space among corporates from sectors such as tech, BFSI, engineering & manufacturing, research, and consulting & analytics. Other sectors such as pharmaceuticals/healthcare, telecommunications and e-commerce are also likely to report higher occupier demand. Space take-up by tech corporates would be largely dominated by foreign players, especially US- and APAC-based firms.In the coming years, the real estate sector is expected to offer vast development and investment opportunities even as the Indian economy transitions and its workforce expand. Office stock is expected to grow to a billion sq. ft. by the end of 2030 and flexible space will become mainstream ­ accounting for 8-10% of the total office stock. A GLIMPSE OF INDIA'S OFFICE REAL ESTATETech and workplace transformation will continue to be high on occupiers' priorities, thus putting employees at the epicentre of all real estate strategiesRam Chandnani,Managing Director
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