Demand for office space across 8 cities up by 17% in Q3: Knight Frank India
Report says the growth reflects the confidence of occupiers as India continues to see economic stability despite global uncertainties
The demand for office space across top eight Indian cities grew by 17 per cent year-on-year in the July-September quarter, recording a net office transaction of 16.1 million square feet in the face of global headwinds, real estate consultancy firm Knight Frank India said in its latest report.
The report titled ‘India Real Estate Q3 2023’ says that the 17 per cent growth in demand for Indian office markets reflects the confidence of occupiers as India continues to see economic stability despite global uncertainties.
Global Capability Centres (GCC) or offshore units of multinational companies, constituted a whopping 44 per cent of the office transactions in the country, showing their rising commitment to conduct business in India.
Domestic corporations constituted 37 per cent of the transactions accounting to 6 million square feet in the third quarter.
Mumbai was the most active office market during Q3 2023, accounting for 20 per cent of the total transactions (3.2 million square feet). It was also the market with the highest office rental at ₹113 per square feet a month.
Mumbai was followed by Pune (3.0 million square feet), Hyderabad (2.9 million square feet) and NCR (2.5 million square feet) in office transactions.
Bengaluru which had recorded 5 million square feet of office transactions in the Q3 2022 saw a fall in demand by -59 per cent YoY. A similar trend was witnessed in Ahmedabad where office transactions slipped to 0.2 million square feet this year from 0.7 million square feet in last year’s Q3.
Kolkata recorded the highest rental appreciation at 10 per cent during the quarter.
In total, 11.5 million square feet of office space attained completion during Q3 2023 across the leading eight markets of India.
New offices in Hyderabad
While new office completions during the said time period were recorded at 11.5 million square feet across the eight cities, a majority of additional office space were completed in Hyderabad (5.3 million square feet/46 per cent), followed by Bengaluru (40 million square feet).
Mumbai and Pune reached their highest quarterly transacted volumes since 2018, at 3.2 million square feet and 3 million square feet respectively. With a transaction volume of 2.9 million square feet, Hyderabad scaled a near three-year high in terms of quarterly transacted volumes on the back of the long-awaited supply which became available during the quarter.
“The relative strength of the Indian economy continues to attract global corporate interest and is reflected in the recovering demand in the Indian office space market. The increasing incidence of GCCs being set up in the current quarter also points toward greater occupier commitment to the overall operational and business environment that India offers,” Shishir Baijal, chairman and managing director of Knight Frank India said in a statement.
“Occupier demand has trended up well over the year and looks to be on course to exceed levels seen in the previous year. It is the broader economic forces of inflation and GDP growth that will take centre-stage in shaping the fortunes Indian office market in the next few months,” he said.
