Report, Real Estate News, ET RealEstate

NEW DELHI: Net office rental in seven major cities to reach 90-95% of pre-COVID-19 level in next fiscal year, thanks to new hires and the return of employees to workplaces, according to the rating agency Crisil. Net rental refers to the absorption of new office space minus the space vacated by tenants.

“The net rental of commercial office space (category A) will reach 90-95% of the pre-pandemic level for the next fiscal year, compared to around 70-75% for the current fiscal year, with a return to offices which ‘is accelerating and new hires are increasing sharply, “he said in a statement.

The increase in net leasing and regular rent collections, which had not declined significantly, will ensure the stability of the credit profiles of commercial property owners, Crisil said.

Net rents in the last fiscal year almost halved to 20 million square feet as absorption of new space was lukewarm and some tenants even left offices, the agency said.

“Leasing also remained modest in the first half of this year. With supply exceeding demand, the market occupancy rate was reduced to 85% in September 2021, compared to 89% before the pandemic in March 2020.

“That said, rental activity is expected to resume from the fourth quarter of this fiscal year and the occupancy rate to reach about 87% next fiscal year, approaching the pre-pandemic level,” the statement said.

The first seven cities – Bengaluru, Chennai, Hyderabad, Kolkata, Metro Mumbai, Delhi-NCR and Pune – have an operational inventory of around 625 million square feet as of March 2021.

Comments are closed.