Office Leasing in Top 6 Indian Cities Surges by 19% in H1 2024

Summary:

 The first half of 2024 saw a 19% year-on-year increase in office space leasing across India's top six cities, totaling 29.4 million square feet. Mumbai and Hyderabad doubled their office space absorption, with Bengaluru leading at 8.8 million sq ft. Major occupants included Bosch, Synopsis, State Bank of India, Tech Mahindra, and HCL Technologies. The demand was driven primarily by BFSI, technology, and engineering sectors.

Impressive Growth in Office Leasing

India’s office space market demonstrated strong performance in the first half of 2024, with leasing activity increasing by 19% year-on-year. A total of 29.4 million square feet was leased across the top six cities, indicating robust confidence among occupiers and positive market conditions, according to Colliers.

Key City Performances

Bengaluru: 8.8 million sq ft absorbed

Mumbai: 5.4 million sq ft absorbed (100% increase)

Hyderabad: 5.5 million sq ft absorbed (100% increase)

Top occupants included Bosch, Synopsis, State Bank of India, Tech Mahindra, and HCL Technologies.

Sector-Specific Demand

The demand in Bengaluru and Mumbai was primarily driven by the banking, financial services, and insurance (BFSI) sector, along with technology and engineering & manufacturing sectors. Mumbai, in particular, saw double the leasing from the previous year, mainly due to strong demand for newly completed office spaces.

Increase in New Supply

In H1 2024, new supply increased by 5% year-on-year, totaling 23 million sq ft across the top six cities. Builders, however, remained cautious.

Mumbai: 700% surge in new supply, marking the highest half-yearly increase in the past three years.

Hyderabad: Also witnessed significant new supply.

Other Cities: Experienced a dip in new supply.

Industry Insights

Arpit Mehrotra, Managing Director of Office Services at Colliers India, stated that the demand for quality office spaces continues to rise, reflecting the confidence of occupiers and investors. He anticipated that easing global financial headwinds and resilience in the domestic economy would support sustained growth in India’s office market. The strong performance in the first half of the year set the tone for office space demand to surpass 50 million sq ft for the third consecutive year in 2024.

Demand Distribution

According to Colliers, the technology and engineering & manufacturing sectors accounted for about half of the total demand during the second quarter of 2024.