- H1 2024 sees 42 Million Square Feet (MSF) leased; 40+ MSF expected in H2 2024
- Net Absorption of ~21 MSF in H1 2024; set to cross 40+ MSF in 2024, likely to be the highest across the APAC region
- Bengaluru leads the charge, doubling its leasing volume from H1 2023
- Fresh leasing and pre-commitments drive robust market growth across key cities
The Indian office market is poised for another record-breaking year, with leasing across the top 8 cities anticipated to cross 80 million square feet in 2024, according to Cushman & Wakefield’s recent office data. This would be the third consecutive year of surpassing the 70 msf milestone- a first in India’s office history.
According to Cushman & Wakefield’s office report, the first half of 2024 recorded 41.9 msf of leasing, marking the highest leasing volume ever for the first half of any year. This represents 56% of the total gross leasing volume (GLV) for 2023. This impressive growth is driven primarily by fresh demand from multinational corporations, the optimisation of pre-leased buildings in key cities, and a higher return to office. The market is anticipated to maintain its strong momentum throughout the year with over 40 msf expected to be leased in the second half.
These impressive numbers can also be partly credited to Q2 2024, which alone saw a GLV of 21.8 msf across the top 8 cities, reflecting a 27% year-on-year increase and an 8.4% growth over the previous quarter. This consistent quarterly growth underscores the strong leasing momentum with GLV exceeding the 20 msf mark for the third consecutive quarter. One of the key drivers of this growth is quick deal closures by global multinationals and domestic companies, indicating a rise in occupier confidence.
India's pivotal role in driving digital transformation for large global multinationals has also significantly contributed to the overall share of GCC transactions, which accounted for 26% of the total GLV in H1 2024. According to the report, around 120 GCC centers were established during the period. Bengaluru led the way, accounting for 47% of leasing by GCCs in H1 2024.
In terms of the cities, Bengaluru, Mumbai, Hyderabad, and Kolkata recorded the highest-ever leasing figures in H1 2024. Bengaluru and Mumbai saw the highest growth of 132% and 71% on y-o-y basis, followed by Hyderabad and Kolkata.
Net absorption in H1 2024 also reached new heights, recording a 46% year-on-year growth—the highest for any first half since 2020. While Bengaluru had the highest share of 29% net absorption amongst all top-8 cities in the first half of the year, cities such as Mumbai, Delhi-NCR, Chennai, and Kolkata recorded their highest-ever biannual net absorption. This positive trend reflects the ongoing confidence of occupiers, particularly from GCCs, in India’s office market. The momentum is expected to continue with net absorption anticipated to cross more than 40 msf, leading the Asia-Pacific region.
The overall Grade A vacancy rate decreased by 40 basis points to 17.7%, the lowest since Q4 2021, further indicating a tightening market.
The IT-BPM sector continued to dominate leasing activity, contributing 26% of the GLV in H1 2024. The BFSI sector followed as the second-largest contributor, recording a significant 60% growth compared to H1 2023. The Engineering & Manufacturing sector also showed strong performance, with a 31% year-on-year growth, capturing 17% of the lease volume. Flexible workspace operators saw a 44% year-on-year growth, while professional services maintained a stable share of 10-12% over the past two years.
New supply for the first half of 2024 stood at 20.8 MSF, with Hyderabad and Bengaluru together accounting for approximately 51% of the new supply. Hyderabad led with a 27% share, while Bengaluru continued its strong performance as a key driver of the market.
Looking ahead, Hyderabad and Bengaluru are projected to lead new supply in 2024, with a combined share of 48%. Mumbai is expected to experience a threefold increase in new supply, further boosting the overall market. Large deal inquiries are anticipated to accelerate project completions in the second half of the year, with new supply in 2024 forecasted to rise by 19% compared to 2023 levels.
Veera Babu, Managing Director, Tenant Representation, said, “India's office leasing market is experiencing a remarkable surge, driven by strong economic fundamentals, advanced digital ecosystem, higher return to office, and pent-up demand from businesses that delayed expansion plans during the pandemic. We are also witnessing companies prioritizing high-quality spaces with strong ESG credentials and modern amenities, leading to a consolidation in the market and a resurgence of large deals (>100,000 sq ft). While domestic companies continue to show a consistent growth, we're also seeing a notable increase in demand from international businesses attracted to India's dynamic economy and supportive business environment. This confluence of factors has fueled a significant surge in leasing activity in the first half of 2024, and we anticipate this year to set a new record for office leasing in India, building on the positive momentum of the past two years.”
Anshul Jain, Chief Executive, India, Southeast Asia and Asia Pacific Tenant Representation further added, “India’s unique combination of a skilled talent pool, a tech-friendly environment, and ongoing infrastructure development, has firmly established it as a premier destination for GCCs. We are observing a surge of interest from companies across various sectors, not just technology or large corporations, eager to establish their presence in the Indian market. This trend is evident in H1 with the addition of 120 new GCC centers, contributing to ~26% of the total GLV share. The positive sentiment among occupiers, particularly GCCs, coupled with a healthy pipeline of quality office supply, sets the stage for a record-breaking year. We anticipate that 2024 GLV will surpass the historic milestone of 80 million square feet, underscoring the sustained strength and potential of India's office market.”
* GLV = all leasing activity in the market, including renewals of contracted term by corporates
*Net absorption = new space occupied during the period (quarter/year), adjusted for exits, if any
About Cushman & Wakefield
Cushman & Wakefield (NYSE: CWK) is a leading global commercial real estate services firm for property owners and occupiers with approximately 52,000 employees in nearly 400 offices and 60 countries. In 2023, the firm reported revenue of $9.5 billion across its core services of property, facilities and project management, leasing, capital markets, and valuation and other services. It also receives numerous industry and business accolades for its award-winning culture and commitment to Diversity, Equity and Inclusion (DEI), sustainability and more. For additional information, visit www.cushmanwakefield.com.
