Market rentals across Grade A spaces increased by 8.7 percent QoQ in Q1CY24.
According to a CREDAI-CRE Matrix report, Grade A office space leasing demand in India will exceed 70 million square feet (MSF) by 2024.
According to the report, Grade A office demand in India increased by 12 percent quarter-on-quarter (QoQ) and 14 percent year-on-year (YoY) in the first quarter of the calendar year 2024, reaching 16.7 million square feet.
Bengaluru, MMR (Mumbai Metropolitan Region), and Delhi-NCR (National Capital Region) were the primary drivers of the increase in demand, accounting for nearly two-thirds of total office demand. According to the report, the top three cities experienced a 23% increase over the previous year.
Market rentals in Grade A spaces increased by 8.7 percent QoQ in Q1CY24 nationwide.
The report also highlighted the size of larger deals (more than 1 lakh sqft) driving office demand. In the first quarter of CY 2024, occupiers leasing more than 1 lakh sqft accounted for 56% of the total up from 36% in the fourth quarter of CY 2023 and 33% in the first quarter of CY 2023. Bengaluru, Hyderabad, and Noida accounted for 66% of these deals over one lakh square feet.
CREDAI President Boman Irani stated that Grade A spaces have seen a significant increase in demand over the last 4-5 years, primarily from GCCs and the IT sector.
“Our forecast for pan-India grade A office demand will be 70 million square feet by 2024 due to strong economic fundamentals and significant investment in physical and digital infrastructure.” This forecast demonstrates not only the commercial real estate sector’s resilience, but also the vast opportunities that developers, corporations, and investors face,” Irani said.
In the resurgence of office space use, the IT/ITeS sector emerged as the dominant force in leasing demand, accounting for approximately 28% of office space requirements. Meanwhile, the BFSI sector’s share of leasing demand grew from 16 percent in the first quarter of fiscal year 2023, and 13 percent in the fourth quarter of the same year to 20 percent in the first quarter of fiscal year 2024.
According to Abhishek Kiran Gupta, CEO and Co-founder of CRE Matrix and IndexTap, the upcoming quarters will see a rise in office supply completions. With market rentals geared toward landlords in key markets, leasing business volumes will also increase.
“As rentals rise in prime markets such as NCR, Bengaluru, and Mumbai, we expect to see larger deals in cities like Pune, Chennai, Hyderabad, and Noida, where occupiers are willing to pay a premium for high-quality space. The new government’s budget is also expected to boost the infrastructure and BFSI sectors, which will likely keep rental rates rising,” he added.