The office market activity in India soared to unprecedented levels in the first half of 2024, with transactions hitting a record 34.7 million square feet. This marks a 33% growth from 26.1 million square feet in H1 2023 across eight major cities, as detailed in Knight Frank India’s flagship report on the Indian Real Estate Market for H1 2024.

According to the report, Bengaluru continued to dominate as the largest office market, with transactions totaling 8.4 million square feet, accounting for 26% of the national office volume. Mumbai followed with 5.8 million square feet, and the National Capital Region (NCR) closely trailed with 5.7 million square feet.

One of the standout performers was Ahmedabad, which recorded an impressive 218% year-on-year growth, albeit from a smaller base. Conversely, Chennai experienced reduced transaction volumes due to a severe shortage of grade-A office space. Overall, the office market saw 25.1 million square feet completed in H1 2024, while vacancy rates decreased to 15.6% due to solid demand, consequently boosting rents. Chennai led the way with a 9% year-on-year rent growth, followed by Bengaluru at 7%.

Businesses focusing on the Indian market significantly increased their leasing activities, accounting for 14.3 million square feet in H1 2024. This rise from 35% to 41% of total leasing volume compared to H1 2023 underscores the growing confidence in the Indian economy and consumer markets. Moreover, overseas corporations expanded their presence, with global capability centres (GCCs) absorbing 48% more space, rising to 9.8 million square feet.

The flexible space sector also grew considerably, making up 21% of total transactions. Co-working spaces, in particular, surged, comprising 72% of flexible space deals, up from 58% in H1 2023. Flexible space operators leased 7.2 million square feet, while third-party IT services occupied 3.4 million square feet of office space.

Office completions in H1 2024 marked a 39% year-on-year growth, reaching 25.1 million square feet. Viral Desai, Senior Executive Director at Knight Frank India, commented on this positive trend: “With improving business sentiments and steadily decreasing uncertainties, occupiers are increasingly inclined to commit to long-term plans and expand operations. Given the strong economic momentum and the improving global growth outlook, coupled with the trend of higher absorption in the second half of the year, we can confidently anticipate that the Indian office market will conclude 2024 on a record high.”

The report also highlighted that rents firmed up across all markets this year, marking the fourth consecutive half-year with either growth or stability. Chennai, Bengaluru, and Kolkata led the major markets with the highest annual growth rates of 9%, 7%, and 6%, respectively, in H1 2024.

In summary, the robust performance of the Indian office market in H1 2024 reflects the sector’s resilience and the growing confidence of domestic and international businesses. With record transactions, substantial growth in flexible spaces, and rising rents, the outlook for the remainder of 2024 remains exceptionally positive.