Robust Demand in Major Cities Keeps Indian Office Market Busy

30 October 23

Segment sees over 16.1 m sq ft office space leases in Sept qtr: Knight Frank data.

Mumbai Robot demand for office space, especially from Global Capability Centers (GCC) is driving commercial real estate in India’s major property markets.

Demand for office space in the largest occupier markets remained strong with over 16.1 million sqft office space leases in the September quarter showed data from Knight Frank Robust occupiers demand up GCC comprised the bulk of the w activity.

Prime office rentals in the key property markets of Delhi NCR Mumbai and Bengaluru remained strong on year on year terms. Mumbai and Delhi NCR are among the top 10 markets across the Asia-Pacific region and rentals for the next 12 months  are also expected to stay stable at current rates, according to Kaight Frick.

Delhi-NCR and Mumbai are the sixth and ninth most expensive office space rental market in the APAC region, respectively even as Bengaluru stood at 19th spot during the September quarter. The resilience exhibited by the Indian economy despite the global headwinds and availability of talent continues to spur the office property markets in key cities.

“The Indian economy’s relative strength remains a magnet for global corporate Interest, evident in the resurgence of demand in the Indian office space market. Transaction volumes have increased, and rental rates have stayed steady in the three major occupier markets Landlords are concentrating on boosting occupancy levels” said Shishir Bajjal, CMD Knight Frank India.

He said the positive outlook in the office market and improved physical occupancy reinforces the belief that the Indian offices market’s resilience will persist in the short to medium term.

Among the major office property markets, Delhi-NCR continued to see rental values maintain levels seen in the past four quarters at 340 per sq ft per month, while office rentals in Mumbai were recorded at 302 sq ft a month. Bengaluru was the least expensive prime office market in the APAC region with monthly rentals at 135 sq ft, which is projected to remain steady in the next 12 months.

Despite vacancies rising in the region, rental declines in Q3 have stabilised, supported by a trend favouring flight-to- quality properties. Overall, the current expansionary cycle in the region affords occupiers a broader range of options and strategies to consider, enhancing their ability to secure favourable lease terms amid current soft conditions,” said Tim Armstrong, global head of occupier strategy and solutions, Knight Frank.

India’s resilient office market performance was led by heightened activities by occupiers setting up GCCs. GCCs constituted 44% of the demand during the quarter as opposed to an average of 21% since the first quarter of 2022.

Occupier activity in this segment was particularly strong in Pune with 2.4 mil- lion sq ft and Hyderabad with 2.2 million sq ft, where as much as 81% and 75% of the total area transacted in these markets respectively, was accounted for by GCCs.

India-facing businesses continued to anchor the market and constituted 37% of the area transacted at 6.0 million sq ft during the September quarter. The activity in this segment was highest in Mumbai with 2.7 million sq ft.


Source – The Economic Times

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