Record Office Space Transactions in India: Bengaluru Leads the Way in Q3 2024
In the third quarter of 2024, India saw a record-breaking 19 million square feet of office space transactions, the highest since early 2018, as reported by Knight Frank India. Global Capability Centers (GCCs) were the largest contributors, accounting for 37% of the total transactions with 7.1 million square feet. Businesses focused on the Indian market followed closely, occupying 6.6 million square feet, indicating growing confidence in the Indian economy.
Bengaluru Takes the Lead
Bengaluru emerged as the top city for office space transactions, with 5.3 million square feet leased, making up 28% of the total volume across eight major cities. This represents a 158% year-on-year growth. Other significant markets included the National Capital Region (NCR) and Chennai, which saw growths of 26% and 35% respectively.
Future Outlook
Shishir Baijal, Chairman and Managing Director of Knight Frank India, expressed optimism about the trend continuing, with expectations of office leasing numbers potentially reaching 70 million square feet by the end of 2024, a 20% increase over the previous high. Despite strong performance in key cities, some areas like Hyderabad and Pune experienced declines in transaction volumes.
Rental and Development Trends
While office transactions were robust, completions remained steady at 11.5 million square feet, unchanged from the previous year. Pune, however, saw a significant 531% increase in completions. Rental values continued to rise, with Bengaluru experiencing a 7% increase and Chennai leading with a 10% rise. This marks the ninth consecutive quarter of rental stability or growth, driven by healthy demand and a focus on wellness and ESG compliance.
Viral Desai, Senior Executive Director at Knight Frank India, noted the strengthening demand for office space as more companies bring employees back to the office. He highlighted the healthy rental growth across key markets and the increasing focus on occupier wellness and ESG compliance.
Doubts Revealed
Q3 2024 -: Q3 2024 refers to the third quarter of the year 2024, which includes the months of July, August, and September.
Global Capability Centers -: Global Capability Centers are offices set up by multinational companies in different countries to handle various business functions like IT, finance, and customer service.
Bengaluru -: Bengaluru, also known as Bangalore, is a major city in India known for its technology industry and is often called the ‘Silicon Valley of India’.
NCR -: NCR stands for National Capital Region, which includes Delhi and surrounding areas like Gurgaon and Noida.
Knight Frank India -: Knight Frank India is a real estate consultancy firm that provides advice and services related to property transactions and market trends.
ESG compliance -: ESG compliance refers to companies following guidelines related to Environmental, Social, and Governance factors to ensure sustainable and ethical business practices.