The Q1 2024 India Office Market Overview by Colliers highlights robust growth in Bengaluru and Hyderabad, driving 50% of leasing activities and 75% of new supply. Rental rates are on the rise, and with stable vacancy levels, the market promises lucrative opportunities for investors and occupiers alike.
The Indian office market demonstrated robust activity in the first quarter of 2024, with Bengaluru and Hyderabad leading. These cities accounted for approximately 50% of leasing activities and 75% of new supply, a testament to the strong confidence developers and occupiers have in the market. This report offers a comprehensive analysis of the key metrics and trends shaping office spaces in major Indian cities, providing stakeholders with a confident view of the market dynamics.
Key Highlights
Bengaluru and Hyderabad Drive Growth – The two cities have emerged as the epicentres of office market activities. Bengaluru alone contributed to 45% of the new supply, while Hyderabad followed with significant uptake due to the growing sectors of Healthcare and Technology.
Sectorial Demand – The engineering and manufacturing sector has shown notable leasing activity, particularly in Bengaluru, representing 39% of the demand. In contrast, the BFSI sector predominantly fueled the markets in Mumbai, with a significant 39% share.
Rental Trends – Rental rates have been trending upward, with increases up to 8% year-on-year across key markets. This surge is aligned with the robust demand-supply equilibrium maintained throughout the quarter.
Vacancy and Absorption Rates
Vacancy levels across India have remained stable, a testament to the balanced demand-supply dynamics. Bengaluru and Hyderabad, with their significant new supply, have managed to keep their vacancy rates at 17.3% and 22.6%, respectively. The Gross Absorption rate in these cities indicates a healthy market, with Hyderabad witnessing a year-on-year increase of over 100% in space uptake.
| City | Stock (million sq ft) | Vacancy Rate (%) |
|---|---|---|
| Bengaluru | 206.7 | 17.4 |
| Mumbai | 122.1 | 10.7 |
| Delhi NCR | 134.3 | 19.8 |
| Hyderabad | 104.3 | 22.6 |
| Chennai | 80.2 | 17.0 |
| Pune | 68.6 | 15.7 |
Market Outlook Q2 2024
The upcoming quarter is anticipated to continue the trend of robust activity, with a potential increase in rental rates as demand persists. Key micro-markets in Bengaluru and Hyderabad are expected to lead this demand, which may slightly adjust vacancy rates.
Conclusion
The India Office Market in Q1 2024 reflects a dynamic and resilient environment. The significant growth in leasing activities, especially in the technology and engineering sectors, along with a steady rise in rental rates, showcases a healthy economic outlook. As we move into Q2 2024, the market is poised for continued growth, promising lucrative opportunities for occupiers and investors.
Download the Full Report to understand better the analysis and details we have briefly touched upon in this summary. By doing so, you can access a more detailed exploration of each city’s market dynamics and additional data, insights, and predictions for the future.
You can optimise your investment and operational strategies using the strategic insights from the Q1 2024 India Office Market Snapshot.
