India’s commercial real estate sector has marked a robust beginning in the first quarter of 2024, with office leasing experiencing a significant surge of 35% year-on-year across the top six cities. According to the latest report by Colliers, the total office leasing space reached a staggering 13.6 million square feet, surpassing expectations and indicating a buoyant market sentiment.
Despite prevailing challenges, the supply of new office spaces remained steady at 9.8 million square feet, indicating stability in the market. However, the demand for office spaces outpaced supply, leading to a notable 4% uptick in average rental values compared to the previous year. This acceleration in rental values signals a positive trajectory for the nation’s commercial real estate market and underscores its attractiveness to businesses and investors alike.
Notably, around 33% of the new Grade A developments were concentrated in Delhi NCR, underscoring the region’s significance as a prime destination for commercial real estate investment and development. The concentration of Grade A developments in Delhi NCR reflects the region’s appeal to businesses seeking modern and well-equipped office spaces, further solidifying its position as a key player in India’s commercial real estate landscape.
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Commenting on the same, Sachin Gawri, Founder and CEO of RISE Infraventures, says, “The report indicates an optimistic outlook for Delhi NCR’s office space market, forecasting further growth in rental values and leasing activity as the region continues its recovery trajectory. With rental values on the rise and vacancy levels remaining relatively stable, Delhi NCR is poised to attract more occupiers and investors in the coming quarters, solidifying its position as a key player in India’s commercial real estate landscape.”
Key sectors driving office leasing activity in Q1 2024 included technology, engineering & manufacturing, and BFSI (Banking, Financial Services, and Insurance), collectively contributing 58% of the total leasing volume. Engineering & manufacturing sectors, in particular, witnessed a remarkable surge, soaring to over 2.3 times compared to Q1 2023, signalling a resurgence in industrial activity.
“We are thrilled to witness the remarkable surge in office leasing activity during Q1 of 2024, signalling a strong demand in India’s commercial real estate landscape. This positive momentum reaffirms our mission to deliver cutting-edge office spaces that inspire creativity, collaboration, and success. We take pride in our role as a developer dedicated to shaping the future of workspaces,” says Sanchit Bhutani, MD, Group 108.
The report also highlights an optimistic outlook for India’s office space market, projecting demand to surpass 50 million square feet in 2024. Supported by robust domestic occupier activity, resurgence in GCC (Global Capability Centers) demand, and tenant base diversification, office leasing is expected to close between 55 and 60 million square feet by the end of the year.
Furthermore, GCCs are anticipated to play a pivotal role in driving office demand, with projections indicating that they will contribute over 40% of the total office demand by 2025. Over the next two years, GCCs are expected to lease approximately 45-50 million square feet of office space, with Dekhi NCR, Bengaluru and Hyderabad emerging as key destinations for GCC leasing activity.
“The significant uptick in office leasing activity in Q1 2024 is a testament to the resilience and potential of India’s commercial real estate sector. As developers deeply rooted in the Delhi NCR region, our focus on creating distinctive, client-centric office environments reflects our commitment to excellence. We remain dedicated to providing businesses with modern, adaptable spaces that facilitate growth and innovation. This momentum further motivates us to continue our journey of building sustainable and future-ready workplaces that elevate the standards of corporate real estate,” says Salil Kumar, Director-Sales & Marketing, CRC Group.
Delhi NCR’s robust performance in Q1 2024 reflects its resilience and potential as a thriving commercial hub. With rental values on the rise and leasing activity gaining momentum, the region is well-positioned to capitalize on emerging opportunities and solidify its position as a key player in India’s commercial real estate landscape, signalling a promising outlook for the future.