News release

Office witnessed growth of at USD 3,102 million in 2020: JLL

India’s office market witnessed significant growth at USD 3,102 million in 2020, 62% of total investment in 2020: JLL

February 22, 2021
  • Average annual net absorption is likely to grow to 30 million sq. ft. by 2021F
  • REITs expected to provide opportunities for institutional investors to build asset portfolios or co-invest with existing platforms
  • Flex space market expected to reach nearly 39 million sq. ft. in 2021

Mumbai, 22 February 2021: What appeared to be a short term pull back from institutional investments2 in Indian real estate in the first three quarters of 2020, came back with a bang in the last quarter with large deals. While most investors remained cautious as asset pricing and revenue stability became challenging, large portfolio deals during the last quarter led to total investments of over USD 5 billion during 2020. The total value of deals in 2019 stood at USD 5,431 million compared to USD 5034 million in 2020. The office space with a total deal valuation at USD 3,102 million lead the pack among asset classes in real estate. The primary markets witnessed a strong response to listed REITs, providing a new avenue for retail and institutional investors.

Office continues to attract maximum investments

Note: Figures are in USD mn 

Source: JLL Research

“India’s emerging REITs market is expected to attract cross border flows and further improve transparency and asset pricing leading to more mature markets. This loop of increasing maturity and capital flows will lead to investments scaling new peaks. Office market is on its road to recovery as it is likely to witness an increased number of new completions of close to 38 million sq. ft., while net absorption is likely to hover around 30 million sq. ft.,” said Samantak Das, Chief Economist and Head of Research, JLL India.

REITs aid investment momentum

The REITs market has been the biggest catalyst to keep investment momentum up. Foreign investors looking for stable yield and regular returns, have been able to see the benefits of a good sponsor quality, track record, transparency and delivering predictable returns in the REITs market. Landlords owning income yielding core office assets have been forming strategies to list their assets through REITs. Listing of new REITs is expected to provide opportunities for institutional investors to build asset portfolios or co-invest with existing platforms before the IPO. 

The provision of the Union Budget 2021-22, allowing to raise debt from foreign portfolio investors at low cost will lead to more asset acquisitions by REITs. Office assets are expected to the preferred option due to stable rental yields and income visibility. 

Higher visibility on asset pricing

Asset pricing is expected to improve with resumption of full economic activity during the year. Core office assets with steady incomes are likely to benefit from better price discovery. On the other hand, opportunistic assets are expected to witness more price adjustments as they lack income certainty and entail more risk.

Office market observed sustained recovery momentum in the second half of 2020

Business activities resumed with the gradual opening of the economy in the third quarter of 2020 and the office market witnessed green shoots of recovery. Sentiments improved further in the last quarter of 2020 with the news of potential vaccine development, and the office market continued its recovery momentum. Net absorption increased by 52%, while new completions grew by 39% when compared to the preceding quarter.

Strong fundamentals to drive the office market

Sustained demand from IT/ITeS occupiers; increased demand from e-commerce, healthcare and FMCG. The resilience displayed by the office market in India since the pandemic owes much to the fact that the IT/ITeS sector has been largely unaffected by the economic downturn. IT/ITeS occupiers continued to account for most of the office leasing activity in 2020. At the same time, the year witnessed increased traction from sectors such as e-commerce, manufacturing and healthcare. In 2021, we expect the IT/ITeS sector to remain the key occupier group while demand from emerging sectors such as e-commerce, manufacturing and healthcare is likely to increase further.

Range-bound vacancies and stable rents

Vacancy in Grade A office spaces in India have stayed below the 15% mark since 2017. Even during a pandemic riddled year, vacancy increased marginally and is expected to remain range-bound in 2021 as well. Given the range-bound vacancy levels, office rents in 2020 remained stable across the seven major office markets in India. However, landlords did consider the situation and were more accommodating to the demands of occupiers. Landlords across markets were more flexible in providing increased rent-free periods, reduced rental escalation and fully furnished deals to prominent occupiers which reduced their net outgo. But the reduction of headline rents was not a popular phenomenon. With stable rental values and low vacancy levels, the office market in India will continue to be characterised by strong fundamentals in 2021. 

Range bound vacancy levels

Source: Real Estate Intelligence Service (REIS), JLL Research

New cycle of office market growth

Strong market fundamentals in the form of sustained IT sector growth, increasing demand from sectors such as e-commerce, healthcare, FMCG and the growing presence of institutional investors will continue to drive the office market in 2021. The year is expected to witness close to 38 million sq. ft of new completions, while net absorption is likely to hover around 30 million sq. ft. This will be at par with the annual net absorption levels seen during 2016-2018. With the rollout of vaccines and the further easing of COVID-19 fear, there is a lot to look forward to and 2021 will be the year when India enters a new cycle of office market growth.

Sustained revival in new completions and net absorption

Note: *Average annual net absorption between 2016 and 2018; 2019 is not considered since the year was an outlier with exceptionally high levels of market activity

Source: Real Estate Intelligence Service (REIS), JLL Research

Flex is the future

The current market penetration of flex spaces in total office space stands at ~3.0%. In 2021, India is expected to witness deeper penetration of flex spaces as corporate occupiers continue to shift away from long-term capital-intensive commitments. Flexible space solutions will be leveraged to satisfy temporary space needs, support a more mobile workforce and enter new geographies. In fact, driven by increased demand from large enterprises, we expect the size of the flex space market to reach nearly 39 million sq. ft in 2021.

What to expect in 2021?

In 2020, a nationwide lockdown forced corporates to adopt work from home practices. This mass remote working experiment was relatively successful, which challenged traditional notions and prompted corporate occupiers to rethink workplace design and utilisation. Corporate occupiers started prioritising business continuity and building mechanisms to insulate against sudden economic fluctuations. Additionally, a cautious approach to capital expenditure was adopted. These changes are likely to shape the future of the office market in India. It is important to note that companies have started welcoming employees back to offices. The proportion of the workforce that has returned has increased in the past few months and this trend is expected to continue. However, many companies might retain a hybrid work style combining remote working with office use. The post-COVID ‘new normal’ for offices will to be characterised by hybrid work models with an enhanced focus on sustainability, wellness and user experience. 

About JLL

JLL (NYSE: JLL) is a leading professional services firm that specializes in real estate and investment management. JLL shapes the future of real estate for a better world by using the most advanced technology to create rewarding opportunities, amazing spaces and sustainable real estate solutions for our clients, our people and our communities. JLL is a Fortune 500 company with annual revenue of $16.6 billion, operations in over 80 countries and a global workforce of operations in over 80 countries and a global workforce of more than 91,000 as of December 31, 2020. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit

In India, JLL has an extensive presence across 10 major cities (Mumbai, Delhi NCR, Bengaluru, Pune, Chennai, Hyderabad, Kolkata, Ahmedabad, Kochi and Coimbatore) and over 130 tier II & III markets with a cumulative strength of close to 12,000 professionals. Headquartered out of Mumbai, we are India’s premier and largest professional services firm specializing in real estate. Our services cover various asset classes such as commercial, residential, industrial, retail, warehouse and logistics, hospitality, healthcare, senior living, data centre and education. For further information, please visit