Mumbai to witness 4.5 mn sq.ft. office leasing in 2022: Savills India report

• BFSI and technology occupiers to lead the office leasing demand
• Demand from data centre operators in the micro-market of Navi Mumbai to emerge

09th February 2022: Mumbai is likely to clock in Grade-A gross absorption of around 4.5 mn sq. ft. in 2022. The strong vaccination drives in the city will continue to build occupier confidence, leading to gradual return to office for employees, according to international real estate advisory firm Savills India.

Outlook for Mumbai office market

• Savills India expects 2022 to clock in Grade-A gross absorption of around 4.5 mn sq. ft.
• BFSI along with technology occupiers is likely to lead the office leasing demand in 2022.
• Increased demand from data centre operators, especially in the micro-market of Navi Mumbai would likely emerge
• The vacancy rate may increase marginally to 21% by December 2022. Overall Grade-A rental values are likely to remain stable
• New supply of 6.9 mn sq. ft. is scheduled to be completed during 2022. This planned supply constitutes IT and non-IT developments concentrated in the micro-markets of Central Mumbai and Navi Mumbai

Key Highlights of 2021 for Mumbai office market

• Mumbai recorded Grade-A gross absorption of 4.6 mn sq. ft. during 2021, registering a YOY increase of 59%. The gross absorption was split as 30:70 between H1 2021 and H2 2021
• In addition to fresh leases of 4.6 mn sq. ft., the city witnessed renewals amounting to 4.7 mn sq. ft. during 2021. The renewals were noticed majorly in the micro-markets of Navi Mumbai and Eastern Suburbs
• The BFSI segment continued to be the demand driver, garnering a 52% share in Grade-A gross absorption, followed by technology occupiers accounting for 12% share and engineering and manufacturing occupiers accounting for 5% share
• Mumbai witnessed 2.5 mn sq. ft. of Grade-A supply infusion, registering an increase of 62% over 2020. Majority of the new supply was in the form of IT developments in the micro-markets of Navi Mumbai and Western Suburbs II
• Vacancy levels in the city rose to 19.1% at the end of December 2021
• The increase in vacancy levels pushed the rental values southwards by 4% in 2021 compared to those in 2020

 Bhavin Thakker, MD, Mumbai & Head – Cross Border Tenant Advisory, Savills India said,” The vaccine administration programme is gradually seeing the return of employees to office. With the precaution (booster) dose now being eligible for many and with Omicron cases reducing, we anticipate the ‘Return to Office’ mantra to gain momentum in the rest of 2022. While we cannot rule out more variants of the virus including some more waves, our prognosis is that office leasing volumes will be stable in 2022. As evident from the fact that in 2021, a full COVID year, Mumbai city witnessed 9.3 million sq. ft. of transactions (fresh leases and renewals put together), corporates want people back in office, of course with safety and precautions.”