AI, Robotics companies led office space absorption in Bengaluru: Vestian

According to report titled- 'The Connect Q2 2024'- the office market demand surge in Bengaluru is attributed to rapid global advancements in artificial intelligence and a supportive local ecosystem

AI and robotics companies contributed 21 per cent of office space absorption in Bengaluru during the second quarter of calendar year 2024, according to the office market report by real estate consultant Vestian.

Overall, the IT-ITeS sector, which includes AI and robotics, accounted for 69 per cent of Bengaluru’s total office space absorption during this period.

According to the report titled- ‘The Connect Q2 2024’- the office market demand surge in Bengaluru is attributed to the rapid global advancements in artificial intelligence and a supportive local ecosystem.

In Q2CY24, Bengaluru led pan-India real estate absorption with a 25 per cent share, followed by Hyderabad and Mumbai at 20 per cent each.

 

Vestian said the IT/ITeS sector led the commercial real estate absorption in Q2CY24, capturing 38 per cent of the market share pan-India. The BFSI and the consulting services sector followed.

Flexible workspaces also saw a significant surge, representing 8 per cent of the total absorption for the quarter.

“Despite global geopolitical challenges, India’s office markets reported robust real estate activities during Q2CY24. The quarter has already set the tone for robust leasing and construction activities for the current calendar year,” said Shrinivas Rao, chief executive officer, Vestian.

In the first half of 2024, the absorption of Grade-A office space across India's top seven cities exceeded 30 million square feet, marking an 18 per cent increase compared to the same period in 2023. With sustained robust demand, the annual absorption for 2024 is projected to surpass 60 million square feet, potentially matching or exceeding the peak levels seen in 2023.

In the second quarter of 2024, commercial real estate absorption reached 17.04 million square feet, marking a 27 per cent increase over the previous quarter and a 23 per cent rise year-on-year. This growth is attributed to an improved global macroeconomic environment and India's strong economic performance amidst global geopolitical challenges.

“Real estate activities are anticipated to increase further on the back of strengthened demand from IT-ITeS and BFSI sectors. Flex Spaces are also likely to play a pivotal role in the growth of office markets in India,” Rao added.

New completions of office spaces surged 17 per cent in H1 2024 to 23.2 million square feet, with Q2 2024 showing a 15 per cent quarterly increase and a 10 per cent annual rise. Most cities, except Pune and Bengaluru, saw higher construction activity. Mumbai led with 3.3 million square feet of new completions, marking a 230 per cent quarterly increase.

In Q2 2024, Bengaluru led new real estate completions with a 28 per cent share, followed by Mumbai. However, new completions in Southern cities — Bengaluru, Chennai, and Hyderabad — fell to 57 per cent from 63 per cent the previous quarter.