 "Office transactions hit record highs in H1 2024: Knight Frank India")
The office market activity in India hit a record 34.7 million square feet in the first half of 2024 (H1 2024), marking a 33 per cent annual growth from 26.1 million square feet in H1 2023, across eight major cities, according to Knight Frank India’s flagship report on India Real Estate - Office and Residential Market (H1 2024).
The report, which presents an analysis of the residential and office market performance across eight major cities for the January to June 2024 period, revealed that Bengaluru remained the largest office market with transactions of 8.4 million square feet, accounting for 26 per cent of total office volume transactions across the country. Mumbai (5.8 million square feet) and National Capital Region (5.7 million square feet) were the other leading commercial markets.
Ahmedabad recorded the strongest year-on-year growth of 218 per cent albeit on a smaller base. Chennai was the only market to see a reduction in transaction volumes due to the acute limitation of grade A space in the city.
Ahmedabad recorded the strongest year-on-year growth of 218 per cent albeit on a smaller base. Chennai was the only market to see a reduction in transaction volumes due to the acute limitation of grade A space in the city.
The office market saw 25.1 million square feet completed in H1 2024. Vacancy rates dropped to 15.6 per cent due to strong demand, boosting rents. Chennai led with 9 per cent year-on-year growth, followed by Bengaluru at 7 per cent.
India-facing businesses have seen significant growth, leasing 14.3 million square feet in H1 2024, up from 35 per cent to 41 per cent of total leasing volume compared to H1 2023. This reflects confidence in the Indian economy and consumer markets. Overseas corporates increased their presence, with global capability centres (GCCs) absorbing 48 per cent more space, rising to 9.8 million square feet.
In H1 2024, flexible spaces made up 21 per cent of total transactions, with co-working spaces increasing to 72 per cent of flexible space deals, up from 58 per cent in H1 2023. Flexible space operators leased 7.2 million square feet, while third-party IT services occupied 3.4 million square feet of office space.
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Office completions recorded a 39 per cent year-on-year growth, tallying up to 25.1 million square feet. “With improving business sentiments and steadily decreasing uncertainties, occupiers are increasingly inclined to commit to long-term plans and expand operations. Given the strong economic momentum and the improving global growth outlook, coupled with the trend of higher absorption in the second half of the year, we can confidently anticipate that the Indian office market will conclude 2024 on a record high,” said Viral Desai, senior executive director, occupier strategy and solutions, industrial and logistics, capital markets and retail agency, Knight Frank India.
Rents firmed up across all markets this year, marking the fourth consecutive half-year with either growth or stability. Chennai, Bengaluru, and Kolkata led large markets with the highest annual growth, reaching 9 per cent, 7 per cent, and 6 per cent, respectively, in H1 2024.
Residential sales
Sales volumes in the residential segment scaled an 11-year high in terms of half-yearly sales in H1 2024 with total sales of 1,73,241 units. Sales grew by 11 per cent year-on-year in H1 2024. Mumbai registered the highest sales of 47,259 units, demonstrating a 16 per cent year-on-year growth in H1 2024. Kolkata witnessed the highest home sales growth (in terms of percentage) at 25 per cent year-on-year, followed by Ahmedabad at 17 per cent.
Development activity has scaled up to tap into the rich vein of demand that the residential market is currently experiencing. The 1,83,401 units launched in H1 2024 represent a 10-year high in terms of units launched in a half-yearly period and are well attuned to the changing preferences of homebuyers, who are now significantly leaning toward experiential living and an upgraded lifestyle.
Notably, the launch volumes in H1 2024 have surpassed the sales figures. A total of 1,83,401 units were launched across the eight markets, registering a 6 per cent year-on-year rise. Mumbai recorded the highest residential launches in the country, with a supply of 46,985 units during the half-year. Kolkata witnessed the highest growth (in terms of percentage growth) at 60 per cent, followed by Pune at 32 per cent.