The first half of 2024 saw office leasing of 29.4 million square feet, driven by demand mainly in Mumbai and Bengaluru, buoying hopes that the year could end with absorption crossing 50 million square feet for the third year in a row.
The two cities accounted for over half of the total leasing activity in the major cities, driven by occupiers from sectors such as BFSI, Technology and Engineering & Manufacturing, a report by Colliers said.
However, during the quarter Chennai, Delhi-NCR and Pune saw a dip in leasing ranging from 39-41 per cent, while in the half year, the declines were in the range 17 to 31 per cent, indicating demand is not uniform across the country.
The leasing in the half year was 19 per cent higher from year ago, the report by Colliers showed. In the June quarter, which will end on the weekend, leasing was close to 16 msf across the top six cities, up 8 per cent year-on-year (y-o-y).
In the half year as well as in the second quarter, Bengaluru was the leader with leasing of 8.8 msf and 4.8 msf with robust growth of 33 per cent and 41 per cent.
Key players
The highest growth was seen in Mumbai, where leasing more than doubled in the quarter and first half. After a prolonged phase of steady demand, Mumbai has seen a significant 3.5 msf of leasing during the quarter, twice the levels as compared to Q2 2023, the Colliers report said, adding, “This is mainly attributable to strong demand from newly completed office supply during the quarter.”
“The demand for quality office spaces continues to surge, reflecting the confidence of occupiers and investors alike. Anticipated easing of global financial headwinds and continued resilience in domestic economy augurs well for sustained growth in India’s office market,” said Arpit Mehrotra, Managing Director, Office services, India.
New supply of office stock rose a modest 5 per cent y-o-y to 23 msf in the first half while over 13 msf of space was added in the June quarter, up 6 per cent on year.
The additions in supply in the first half came in only two cities – Hyderabad and Mumbai, while all other cities saw a steep decline. Mumbai saw the maximum surge in office supply.