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Dailymirror.news, October 31st,2024: India’s office space market is poised to set a new record in 2024, with projected absorption surpassing 70 million square feet, according to Savills India’s recent report. Demand reached 55.1 million square feet from January to September 2024, a 30% year-on-year increase across six major cities.
This record-breaking year-to-date (YTD) leasing activity for January-September matches the full-year performance of 2022. With only 7 million square feet needed to surpass 2023’s total, 2024 is expected to achieve a remarkable 70-74 million square feet of absorption.
Q3 2024 Highlights
In Q3 2024, office absorption hit 20.2 million square feet, up 28% from Q3 2023. Bengaluru, Delhi-NCR, and Mumbai accounted for 66% of total leasing. The IT-BPM sector dominated with a 29% share, followed by Flexible Workspaces (23%) and BFSI (22%). Large deals represented half of the leasing activity, with Bengaluru, Delhi-NCR, and Pune leading. New office completions slowed, totaling 32.6 million square feet in the first nine months—a 12% YoY decrease, resulting in a vacancy rate drop to 15.5% by September’s end.
2024 Projections
Savills India anticipates that leasing activity could reach 70-74 million square feet by year-end, a 17% rise from 2023. New office supply is forecasted at 60-62 million square feet, a 22% increase over last year.
Key Metrics (mn sq. ft.)
| Metric | Q3 2024 | YTD 2024 | 2024 Forecast |
|---|---|---|---|
| Gross Absorption | 20.2 | 55.1 | 70-74 |
| Supply | 15.3 | 32.6 | 60-62 |
| Overall Grade A Stock | 782.7 | 782.7 | 806-810 |
| Source: Savills India Research |
City-Level Performance (YTD 2024)
| City | Gross Absorption | Supply | Grade A Stock |
|---|---|---|---|
| Bengaluru | 15.9 | 9.8 | 231.5 |
| Chennai | 6.7 | 1.7 | 91.3 |
| Delhi-NCR | 7.6 | 2.0 | 144.6 |
| Hyderabad | 8.7 | 8.5 | 125.7 |
| Mumbai | 9.6 | 6.7 | 121.4 |
| Pune | 6.6 | 3.8 | 68.2 |
| Source: Savills India Research |
According to Naveen Nandwani, MD of Commercial Advisory and Transactions at Savills India, “India’s office market hit record-high absorption in Q3 2024, reflecting strong demand from occupiers, especially as employees return to offices. This momentum is expected to continue through year-end, potentially pushing 2024’s absorption past 70 million square feet.”
City Highlights for Q3 2024 & YTD 2024
Bengaluru
- Q3 2024: 6.2 million sq. ft. absorption, a 48% YoY increase; 67% of deals were large-sized.
- YTD absorption: 15.9 million sq. ft., a 49% YoY rise, with expected record absorption of 20 million sq. ft.
- BFSI sector contributed 23% of leasing in Q3, while IT-BPM led with 46%.
Chennai
- Q3 absorption was 1.8 million sq. ft., a 35% YoY decrease, with 42% of leasing from large deals.
- Demand concentrated in OMR Zone 1 and MPR micro-markets.
- Flexible workspace segment grew from 6% to 29% market share, with rental hikes of 7%-9% in key areas.
Delhi-NCR
- Q3 absorption: 4.0 million sq. ft., a 92% YoY increase.
- Gurugram led with 64% of leasing activity, NOIDA with 27%, and Delhi with 9%.
- Flexible workspaces had a 50% leasing share in Q3.
Mumbai
- Q3 2024: 3.2 million sq. ft. absorption, a 35% YoY increase, with mid-sized deals leading.
- Projected absorption of 12 million sq. ft., marking a peak for the decade.
- BFSI dominated demand with a 32% share, followed by the tech sector at 17%.
Pune
- Q3 absorption: 2.0 million sq. ft., a 42% YoY rise, led by BFSI’s 55% share.
- Expected YTD absorption of 9 million sq. ft. with strong pre-leasing activity.
Hyderabad
- YTD absorption reached 8.7 million sq. ft., a 34% YoY rise.
- IT-BPM sector accounted for 52% of Q3 leasing.
- SBD II (Gachibowli, Nanakramguda) contributed 67% of new Q3 supply.
