India’s Office leasing space to decelerate by 28 per cent due to coronavirus crisis
BENGALURU: India’s office real estate market may decelerate by 28 per cent year-on-year in 2020 due to the Covid-19 crisis, but there is a likelihood of strong-to-moderate rebound in office leasing activity in 2021, said a report by global property consultants, Savills India. It also said that co-working firms that host mostly start-ups and independent professionals, and have a fairly high exposure to leases and monthly contracts, will be severely hit.
According to the report, office leasing will slow down in second and third quarters of 2020 with tenants reprogramming their needs, while the supply of fresh workplaces will be paused temporarily due to the halt in overall construction work. Around 69 per cent participants surveyed by the report agreed that virtual or digital workplaces will be a reality in the post-pandemic world.
The work-from-home norm, coupled with shut down in non-essential services and piling job losses, has led to negative impact on the commercial real estate, particularly office markets, the report said.
Co-working companies in India, meanwhile, have reportedly been served force majeure clauses from their clients, under which the latter aren’t liable to pay monthly rentals in the wake of an unprecedented situation or calamity. “The trend is being seen globally with the co-working majors now reprogramming arrangements with landlords so that they can pay only a part of the rents,” a sector analyst said.
Globally, some of the biggest co-working firms such as WeWork are far from recovery mode and have now filed lawsuit against their biggest investor, SoftBank, for failing to follow up on its $3 billion offer to rescue the start-up that has been caught in the thick of the storm. SoftBank has reportedly cited the ongoing coronavirus pandemic as a reason for withdrawal of the offer.