Mumbai: India-facing businesses of multinational companies and global capability centres (GCCs) have driven the demand and absorption of office spaces, helping rental growth and reducing vacancies of commercial properties across the country in the first quarter of 2024.

Building upon the robust performance observed throughout 2023, the market has sustained the momentum during the quarter, further solidifying its position.

A surge in office space transactions across the top eight markets of the country pushed the trans- action volume to 16.2 million sqft, marking a 43% on-year growth during the March quarter, showed data from Knight Frank.

Bengaluru led the leasing growth with 3.5 million sqft of transactions.

India-facing businesses continued to anchor the country’s office market with 37% of demand and transaction of 5.9 million sq ft. GCCs’ further consolidated position made up 31% of office demand with transaction volumes of 5 million sq ft during the quarter. “The real estate market experienced another exceptional period characterised by robust performances in both the office and residential sectors,” said Shishir Baijal, CMD, Knight Frank In- dia. “The office sector maintained its upward trajectory, delivering one of the most impressive quarterly demand performances to date. The country’s economic stability has spurred businesses operating in India to expand their operations, consequently driving demand for office spaces.” Bengaluru led the leasing growth with 3.5 million sq ft of transactions, constituting 22% of the total office take-up. Hyderabad emerged as a standout performer, witnessing a staggering 261% on-year surge in office space transactions at 3 million sq ft, closely followed by Pune with a notable 146% growth. The NCR and Mumbai market recorded 3.1 mil- lion sq ft and 2.8 million sq ft of transactions, respectively.

“The Indian office property market is experiencing a significant up- trend in demand, driven by a con- fluence of factors including economic growth trajectory, investments and initiatives like Make in India and Digital India,” said Quaiser Parvez, CEO, Nucleus Office Parks.

“With expanding businesses and a surge in demand for space by GCCs, the absorption of office spaces continues to soar and the out- look also remains positive.”

Bengaluru and Hyderabad collectively represented 75% of all transactions within the GCC space. Within Bengaluru, GCCs constituted 51% of the total volume transacted, while in Hyderabad, they comprised a substantial 65%.

“The robust occupier activity witnessed during the quarter is a testament to the buoyant sentiment pervading the economy, underpinned by the upward revision of economic growth projections until 2024-25. This augurs favourably for the trajectory of office space demand in the fore- seeable future,” said Viral Desai, senior executive director at Knight Frank India.

Source- The Economic Times


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