Office Space Leasing Across India's Major Markets Jumps 15% in First Quarter
Demand for office space in India's key commercial hubs witnessed a significant upswing during the January–March quarter of 2024, with gross leasing activity climbing by a robust 15% compared to the same period last year. According to the latest market update from real estate consultancy Colliers India, total leasing across seven major cities reached 18.3 million square feet, up from 15.9 million square feet in Q1 2023.
Steady Growth Amid Global Economic Uncertainties
The report, released on Thursday, highlights that leasing momentum remained resilient despite ongoing global economic headwinds. This sustained activity is primarily attributed to stronger occupier demand and the continued aggressive expansion of Global Capability Centres (GCCs) in the country. It is important to note that the reported gross absorption figures specifically exclude lease renewals, pre-commitments, and transactions finalized only with a letter of intent.
City-Wise Performance: A Mixed Bag with Clear Leaders
The growth was not uniform across all metropolitan areas, revealing distinct regional trends:
- Bengaluru maintained its position as the market leader, recording 5.3 million sq ft of leasing. This represents an 18% increase from the 4.5 million sq ft leased in the first quarter of the previous year.
- Hyderabad emerged as a standout performer, posting one of the sharpest gains. Leasing activity in the city doubled year-on-year to reach 3.4 million sq ft, up dramatically from 1.7 million sq ft.
- Pune also demonstrated exceptionally strong momentum, with gross leasing more than doubling to 2.5 million sq ft from 1.2 million sq ft a year earlier.
- Mumbai saw a healthy 23% rise in demand, with leasing volume increasing to 2.7 million sq ft from 2.2 million sq ft.
However, the quarter also saw declines in two major markets:
- Delhi-NCR experienced a notable 30% contraction in gross leasing, which fell to 2.3 million sq ft from 3.3 million sq ft.
- Chennai witnessed a 31% decrease, with leasing dropping to 2 million sq ft from 2.9 million sq ft.
Meanwhile, Kolkata's office space market remained stable but stagnant, with leasing activity unchanged at 0.1 million sq ft during the quarter.
Underpinning Factors and Market Outlook
The data underscores a shifting landscape in India's commercial real estate sector. The robust growth in technology and business hubs like Bengaluru, Hyderabad, and Pune highlights the sustained corporate interest in establishing and expanding operational centers in these cities. The contrasting performance in Delhi-NCR and Chennai suggests localized market dynamics or a potential shift in corporate preferences towards other emerging or established hubs. Overall, the 15% nationwide growth signals a positive trajectory for the office segment, driven by India's growing appeal as a destination for global business services and innovation centers.
