Indian Office Space Supply Sees 26% Annual Growth in Top Cities Driven by Strong Demand

In the third quarter of the year, India's six major cities saw a significant 26% annual expansion in new office space supply, totaling 16.1 million square feet. This surge reflects developers capitalizing on strong demand from both international and Indian companies seeking premium office environments.

Pune emerged as the top performer, with new office supply soaring by 164% to 3.70 million square feet compared to the same period last year. Delhi-NCR followed with a 35% increase to 3.10 million square feet. Chennai witnessed a dramatic jump of 320% to 2.1 million square feet, and Mumbai's supply doubled to 1.80 million square feet. However, Bengaluru, India's largest office market, experienced a 6% decrease in new supply, amounting to 3.40 million square feet. Hyderabad also saw a 51% fall to 2 million square feet, and Kolkata reported no new supply.

The robust absorption of office space, which rose 6% to 19.69 million square feet across seven major cities, was primarily driven by Global Capability Centres (GCCs). Experts suggest that potential H-1B visa restrictions could further boost demand for Indian office spaces as GCCs expand their presence.

Impact: This positive trend in office space supply and absorption is beneficial for real estate developers like DLF Ltd and Prestige Estates Projects, as well as Real Estate Investment Trusts (REITs) such as Embassy Office Parks REIT, Mindspace Business Parks REIT, and Brookfield India Real Estate Trust. It indicates a healthy commercial real estate market with potential for further growth, boosting investor confidence in the sector. Rating: 7/10.

Difficult Terms: GCCs (Global Capability Centres): Offshore facilities established by multinational corporations in India to manage IT, research and development, or other business functions, representing a significant source of demand for office spaces. Absorption: The amount of commercial space that has been leased or occupied during a specific period, serving as a key indicator of market demand. Occupier Base: The collective group of companies or tenants leasing office properties. A diverse occupier base contributes to market stability. Greenfield: The development of new projects on undeveloped land. Brownfield: The redevelopment or expansion of existing properties or sites. REITs (Real Estate Investment Trusts): Companies that own, operate, or finance income-generating real estate assets, offering investors a way to participate in large-scale property portfolios.