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The Indian office market is set for a record year in 2024, with expected leasing exceeding 80 million square feet across the top eight cities, according to Cushman & Wakefield. The first half of 2024 alone saw 41.9 million square feet leased, marking a 56% share of 2023's total leasing volume. Bengaluru, a key player, contributed significantly, with Global Capability Centers driving 26% of leasing. The second quarter saw a 27% increase in leasing year-on-year. The market is buoyed by strong demand from multinational firms and new supply, indicating continued growth and confidence in India's commercial real estate sector.
The Indian office market is on track for a record year in 2024, with expectations of leasing hitting over 80 million square feet across the top eight cities. This report, supported by Cushman & Wakefield data, suggests this would mark the third consecutive year that leasing surpasses the 70 million square feet threshold-a significant achievement in India's commercial real estate sector. Advertisement
The first half of 2024 has already shown remarkable activity, with 41.9 million square feet leased, the highest figure recorded for any first semester. This volume accounts for 56% of the total leasing for 2023, highlighting a robust recovery driven mainly by multinational companies. These firms are returning to office spaces in greater numbers than before, and many are optimizing pre-leased properties to better accommodate their needs. Experts expect this momentum to persist, with a projected 40 million square feet likely to be leased in the latter half of the year.
A closer look reveals that the second quarter of 2024 was particularly strong, registering a gross leasing volume of 21.8 million square feet. This represents a year-on-year increase of 27% and an 8.4% rise from the preceding quarter, indicating a sustained growth trend. The marketplace has seen quick deal closures, which reflects a growing confidence among occupiers in India's commercial property landscape.
Bengaluru stands out in this landscape. The city saw a significant portion of leasing activity, driven by the establishment of Global Capability Centers (GCCs). In the first half of 2024, these centers were responsible for 26% of the leasing volume, with Bengaluru alone accounting for 47% of this segment. This trend emphasizes India's role in digital transformation for global companies and underscores the strategic importance of its office spaces.
In addition to Bengaluru, cities like Mumbai, Hyderabad, and Kolkata also reported notable leasing figures, with Bengaluru and Mumbai showing year-on-year growth rates of 132% and 71%, respectively. This growth reflects a broader trend in which various sectors, including IT-BPM and BFSI (Banking, Financial Services, and Insurance), have increasingly engaged in office leasing. The IT-BPM sector led the way, making up 26% of total leasing volume in the first half of 2024.
Another significant indicator of the market's health is net absorption, which achieved a record 46% year-on-year growth, the highest level for any first half since 2020. Bengaluru contributed the largest share of net absorption at 29%, while other major cities also recorded their highest biannual figures. This upward trend is indicative of growing confidence among occupiers and suggests that the demand for office spaces will continue to exceed supply for the foreseeable future.
As for new supply in the market, over 20.8 million square feet were introduced in the first half of 2024, with Hyderabad and Bengaluru accounting for approximately 51%. Looking ahead, these two cities are expected to lead in new supply for the year, with Hyderabad anticipated to triple its previous output. This influx of new office space is expected to support the anticipated growth in leasing and help meet demand.
Overall, the Indian office market is showing resilience and potential for growth. With a tightening vacancy rate and an influx of new supply, the market is poised to enhance its position as a vibrant hub for businesses and multinational corporations looking to establish or expand their presence in India. The outlook remains positive, as demand from various sectors continues to fuel this growth trajectory.
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