New Delhi [India], April 28 : Office real estate in India did well in the first quarter of 2024, increasing to 13.40 million sq ft from 11.85 million sq ft same quarter of last year, as per the latest office market report from Vestian, a US-headquartered workplace solutions firm.
During the January-March 2024 quarter, the office market showcased a 13 per cent increase in absorption. However, the absorption declined by 31 per cent on a quarterly basis.
The southern cities of Bengaluru, Chennai, and Hyderabad accounted for 61 per cent of the pan-India absorption in the first quarter of 2024, increasing its share from 54 per cent a year earlier, the Vestian report said.
Absorption more than doubled within a year in Chennai and Mumbai, whereas it increased by 51 per cent in Hyderabad. All the other cities witnessed a decline over the same period a year earlier.
Moreover, IT-ITeS sector dominated absorption with 47 per cent share, followed by the BFSI sector with 11 per cent share. Flexible spaces garnered interest from large conglomerates post-pandemic, accounting for 8 per cent of the pan-India absorption in 2024.
Shrinivas Rao, FRICS, CEO, Vestian said, 'Return to Office' mandates are likely to renew demand for office spaces across the country and may drive the next wave of growth amid global headwinds.
"2024 started on a positive note as major office markets of India witnessed sustained absorption activities," Rao added.
Further, new completions of projects followed the same trend and witnessed an annual increase of 26 per cent, reaching 10.8 million sq ft in the first quarter. However, new completions declined by 27 per cent over the previous quarter. While Bengaluru dominated new completions with 3.7 million sq ft, Hyderabad reported nearly 2.5 million sq ft of supply during the first quarter of 2024.
Currently, the vacancy level stands at 13.8 per cent, which may improve further in the second half of 2024, owing to the growing prominence of 'Back to Office' mandates, the report added.
Rao further added, "Domestic investors are bullish about India's growth story and may contribute significantly to the future growth of office spaces in India."