Knight Frank India has revealed a significant increase in office space transactions across India’s top eight markets, totalling 16.2 million square feet (mn sq ft) in their latest report titled ‘India Real Estate: Office and Residential Report (January – March 2024)’. This represents a 43 per cent year-on-year (YoY) growth in Q1 2024. Leading this surge is Bengaluru, securing the top position with 3.5 mn sq ft of transactions, constituting 22 per cent of the total office take-up during the first quarter of 2024.
Office completions saw remarkable growth, escalating by 185 per cent YoY to 13 mn sq ft in Q1 2024, largely due to the unusually low volumes seen in the base period of Q1 2023. The National Capital Region (NCR) emerged as the second most active office market with 3.1 mn sq ft of transactions, while Hyderabad also demonstrated consistent growth, reaching a post-pandemic high of 3 mn sq ft in Q1 2024.
Reacting to the report, Ishaan Singh, Director, AIPL, said, “This report by Knight Frank tells volumes about the vibrant growth of the office market in Q1 2024, which witnessed transactions of 16.2 million square feet across India’s top eight markets marking a 43% year-on-year (YoY) growth. The National Capital Region (NCR) emerges as the second most active office market, contributing 3.1 million square feet of transactions. This surge reflects the resilience and dynamism of the NCR’s commercial real estate sector and makes Gurugram, which is among the region’s foremost realty hubs, a lucrative investment proposition.”
Sunil Sisodiya, founder, Geetanjali Homestate, said, “The unprecedented surge in India’s office space market reflects both economic growth and changing work dynamics. With the rise of remote work, companies seek adaptable office spaces to accommodate hybrid models. This demand drives prices upwards, reflecting confidence in India’s business landscape. However, the soaring costs pose challenges for startups and small businesses, limiting their access to prime locations. Additionally, the booming office market indirectly impacts the residential sector, as escalating commercial rents may influence housing affordability in urban areas.”
The surge in office space transactions was primarily driven by India-facing businesses and Global Capability Centers (GCC), recording 5.9 mn sq ft and 5.0 mn sq ft of transactions respectively. Flex space also maintained its momentum, accounting for 23 per cent of transactions, matching its highest quarterly volumes previously recorded in Q4 2021.
Moreover, the office market witnessed 13.0 mn sq ft of completions in Q1 2024, with rents either stabilizing or experiencing robust growth in YoY terms. The report also highlighted strong expansion in the residential domain across the foremost eight residential markets.