India’s Q1 2024 office market showed resilience, with gross leasing surpassing 15 million sq ft, marking the second-best first quarter. Domestic occupiers led the demand, particularly in BFSI, Flex, and manufacturing sectors. Rental values rose, and Delhi NCR and Bengaluru dominated leasing activity.
The Q1 2024 performance of India’s office market has demonstrated resilience and growth, marking the second-best first quarter in recent history. With gross leasing activity surpassing 15 million sq ft for the third consecutive quarter, the office market is set to reach new heights, driven by solid demand from both domestic and global occupiers.
Key Highlights
Gross Leasing Activity – India’s top seven markets recorded an impressive 15.16 million sq ft of gross leasing in Q1 2024, a 13.8% increase compared to Q1 2023. This marks the second-highest gross leasing recorded in the first quarter of any year, trailing only Q1 2020.
Net Absorption – Net absorption stood at 8.3 million sq ft, up 10.9% year-on-year. Delhi NCR led with a 28.2% share, followed by Bengaluru and Mumbai.
New Completions – New office completions were at a 15-quarter low of 8.28 million sq ft, down 55.8% quarter-on-quarter. Hyderabad accounted for the largest share of new completions.
Vacancy Rate – Vacancy rates decreased by ten basis points quarter-on-quarter to 17.1%, with core markets and superior quality assets continuing to attract occupiers.
Domestic Occupiers Lead the Charge
In Q1 2024, domestic occupiers, particularly in the BFSI, Flex, and manufacturing/engineering segments, dominated the leasing activity, contributing approximately 53% to the gross leasing. This trend underscores the strength and resilience of India’s domestic economy, which has stepped up amidst slower decision-making from global corporations.
City-Specific Insights
Delhi NCR and Bengaluru – These two cities accounted for 47% of the gross leasing activity in Q1 2024, with Delhi NCR contributing 26.6% and Bengaluru 20.4%. Chennai, Mumbai, and Pune also showed strong leasing figures.
Hyderabad – Led new completions with a 25.1% share, while Delhi NCR and Mumbai followed closely. The city also showed significant net absorption and leasing activity, reflecting its growing prominence in the office market.
Sectoral Performance
Technology Sector – Maintained a steady share of gross leasing at 24% despite facing challenges from global headwinds.
Flex Space – Operators accounted for 21% of gross leasing, marking the highest post-COVID absorption for this segment.
Manufacturing/Engineering – Captured a 20% share, reflecting robust growth due to India’s expanding Global Capability Centers (GCCs) and high-end R&D work.
Rental Growth
Rental values continued to rise across major cities, with Chennai witnessing the highest year-on-year growth of 4.8%, followed by Bengaluru and Kolkata. The demand for quality office spaces in core markets has allowed landlords to command premiums, ensuring rents remain sticky.
Market Outlook
The office market in India is expected to surpass the momentum observed in 2023. The entry and expansion of GCCs, favourable manufacturing policies, and a resurgence in tech outsourcing are anticipated to drive demand. As return-to-office levels rise, corporations invest in new office spaces focused on employee well-being, sustainability, and quality.
Detailed Statistics
| Metric | Q1 2023 | Q1 2024 | YoY Change |
|---|---|---|---|
| Net Absorption | 7.48 mn sq ft | 8.30 mn sq ft | 10.9% |
| New Completions | 9.96 mn sq ft | 8.28 mn sq ft | -16.90% |
| Gross Leasing | 13.32 mn sq ft | 15.16 mn sq ft | 13.8% |
| Vacancy Rate | 17.20% | 17.10% | -10 bps |
Conclusion
India’s office market continues to exhibit robust growth, driven by strong demand from both domestic and global players. Despite global economic uncertainties, the market’s resilience highlights the country’s competitive edge in attracting and retaining corporate occupiers. With the positive momentum expected to continue, the office market is poised for a promising year ahead, characterised by strategic expansions and quality developments.
For further insights and detailed analysis, refer to the JLL India Office Market Update: Q1 2024 report.
