Tier-1 cities witnessed a 7% surge in commercial realty supply in Q3: Study

financialexpress.com:

In the third quarter of 2023, India’s top Tier-1 cities witnessed a 7% surge in commercial real estate supply, amounting to a total of 14.61 million square feet, according to a PropEquity study. This can be attributed to the government’s proactive measures to stimulate growth in the IT sector through tax incentives and infrastructural improvements.

The city of Hyderabad emerged as the frontrunner, claiming approximately 35% of this new supply. Following closely behind was Bengaluru, accounting for 25% of the new supply.

During the same period, there was a remarkable 20% surge in net occupancy, representing a significant increase from 10.30 million square feet (in Msft) in the previous quarter, Q2 CY’23, to 12.31 million square feet (in Msft) in Q3 CY’23. On the other hand, gross occupancy slightly increased by 2% during the third quarter of 2023 when compared to the preceding quarter, Q2 2023.

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This substantial growth in occupancy is a testament to the dynamic nature of the market and the heightened demand for commercial real estate during that period. It suggests that businesses and enterprises have been actively expanding their presence and operations, underscoring the vibrancy of the sector and its potential for continued development in the near future.

Among the Tier 1 cities, MMR ranks the top where net occupancy outstrips new supply and also records a 9% Y-o-Y increase in new supply.

The Delhi-NCR region, however, has seen a significant reduction in new supply over the past few quarters, with a Y-o-Y decline of 65%. This is largely due to the surplus stock from previous quarters and high rental prices in the current quarter. Consequently,