Driven by strong leasing activity, Q2 (April-May-June) was the first time when all top seven cities (Mumbai, Delhi NCR, Bengaluru, Chennai, Kolkata, Pune, and Hyderabad) recorded gross leasing volumes of at least 1 million sq. ft.
The second quarter gross leasing was up 21.3% Q-o-Q and was recorded at 18.38 million sq. ft. The last four consecutive (Q22024, Q12024, Q42023 and Q32023) quarters have now exceeded the 15 million sq. ft mark in gross leasing volumes, underpinning the strong momentum in the office market. This quarter is a testament to the inherent strengths of the India office market, with the strong fundamentals clearly indicating the potential for this year to establish new peaks, surpassing the historic highs seen in 2023. Furthermore, H1 2024 (January to June) marked the best-ever first half, with leasing volumes at 33.5 million sq. ft, surpassing the previous highest H1 performance seen in 2019.
Bengaluru led the charge, accounting for a 33% share of the quarterly gross leasing, followed by Delhi NCR with a 20.7% share. These two cities have been interchanging their positions in the top two for some time but remain the markets with maximum occupier activity. In fact, for Bengaluru, Q2 2024 gross leasing was its third highest ever. Hyderabad and Mumbai also recorded strong leasing activity with respective shares of 13.1% and 12.2%. This was the first quarter when all seven cities under review, recorded gross leasing levels exceeding 1 million sq. ft. This was on account of the strong performance recorded by Kolkata in the quarter.
Tech sector a remarkable comeback, fuelling optimism as BFSI, Manufacturing/Engineering and Industries maintain strong performances.
Tech saw its strongest performance in two years, with its share of Q2 gross leasing at 31.5%. BFSI also had a strong showing, accounting for a 20.3% share, followed by the manufacturing/engineering segment with a 17.3% share. Flex operator activity remained resilient with a 14.6% share of leasing activity in Q2. This segment remains on track to match its previous historic highs.
The net absorption figures across the top seven cities stood at 10.58 million sq. ft, a significant improvement of 27.5% Q-o-Q. On a H1 comparison, there was a 22.7% Y-o-Y increase, indicating sustained expansion-driven activity that has led to firms, both global and domestic, adding to their aggregate headcount. It is a testament to the country’s skilled talent pool and competitive costs that most global firms’ business plans involve capacity augmentation in India.
The net absorption during the quarter was led by Delhi NCR with share of 22.9%, followed by Bengaluru with 20.62% and Mumbai with 15.2% shares, respectively. In the half yearly analysis, these three cities maintained their top positions.
The country’s growth momentum will continue to be driven by GCCs, both existing ones expanding their footprint and new ones entering the country across varied segments. There is a clear broad basing of GCC activity with high-end tech and BFSI now being supplemented by growth across engineering, design, and manufacturing sectors. Domestic occupier activity is expected to be shored up by flex operators, financial services, third-party tech outsourcing firms and manufacturing/industrial players. We now stand at an inflection point where India office markets are expected to move ahead given the tailwinds in the global and domestic economy conditions and India’s standing as the” office to the world”. The year 2024 is projected to mark record breaking gross leasing of 65-70 million sq. ft, setting the stage for a historic milestone in the country’s commercial real estate market.
