Whalesbook
India's office market showed strong momentum in the first quarter of 2024, with gross leasing activity reaching 18.3 million square feet. This figure represents a 15% increase compared to the same period last year, according to a report by Colliers India. The growth was underpinned by steady demand from businesses and continued expansion of Global Capability Centres (GCCs), demonstrating resilience amidst global economic uncertainties.
Colliers India identified robust occupier demand and the strategic growth of GCCs as the primary catalysts for the 18.3 million sq ft leased. This leasing volume marks a significant 15% rise from the 15.9 million sq ft recorded in Q1 2023. The report clarified that its "gross absorption" figures focus solely on newly occupied spaces, excluding lease renewals, pre-commitments, or deals based only on a letter of intent.
While the overall national figures indicated growth, performance varied considerably across key cities. Bengaluru, India's largest office market, saw leasing volume climb by 18% to 5.3 million sq ft. Hyderabad and Pune emerged as standout performers, with leasing activity more than doubling to 3.4 million sq ft and 2.5 million sq ft, respectively. Mumbai also contributed positively with a 23% increase in demand, reaching 2.7 million sq ft. In contrast, the National Capital Region (NCR) experienced a 30% contraction, falling to 2.3 million sq ft from 3.3 million sq ft. Chennai saw a 31% decrease, leasing 2 million sq ft. Kolkata's market remained stagnant, absorbing only 0.1 million sq ft.
This divergence highlights different economic dynamics at play in India's urban centers. The sharp declines observed in Delhi-NCR and Chennai suggest potential challenges in these markets, which could stem from factors like saturation of prime spaces, increased competition, or specific local economic conditions. The contrasting robust growth in Hyderabad and Pune, alongside flat performance in Kolkata, points to varied demand drivers and absorption capacities across India's major business hubs.
Looking ahead, sustained occupier demand and ongoing GCC expansion are expected to continue supporting the Indian office market. However, the uneven performance across cities indicates that future growth will likely depend on localized economic vitality and the ability of market participants to adapt to regional needs. Analysts anticipate that these dynamic city-specific trends will be key drivers for the market, rather than a uniform national pattern.