New office supply hit an all-time high in 2024
across seven major cities at 515 lakh sq ft: Vestian
New Delhi, 27th Feb 2025: Vestian’s office market
report stated that 2024 has been challenging for the Indian office market due
to global macroeconomic uncertainty, escalating geopolitical frictions, and
sticky inflation. Despite these challenges, India’s office market reported the
highest-ever supply in any year.
A surge in demand for grade-A office spaces kept developers active
throughout the year. Construction activities increased by 7% compared to the
previous year, reaching 515 lakh square feet, marking the highest supply ever
recorded. Among the top seven cities, the maximum fresh supply was seen in
Hyderabad followed by Bengaluru.
With robust absorption and supply in 2024, vacancy rates improved
slightly, decreasing from 13.98% in 2023 to 13.91% in 2024. Additionally,
rental prices increased by 3.8% to 8.2% across the top seven cities.
Since the pandemic, office space absorption has gradually increased each
year, despite global headwinds. In 2024, the absorption reached an all-time
high of 707 lakh square feet, reflecting a 16% annual increase. All cities
except the National Capital Region (NCR) and Kolkata reported their
highest-ever absorption levels during 2024. Absorption in Kolkata and NCR saw
annual declines of 36% and 14%, respectively.
Office Market Summary: 2024
|
City |
Absorption (Lakh sq ft) |
Share (%) |
Y-o-Y Change (%) |
New Completions (Lakh sq
ft) |
Share (%) |
Y-o-Y Change (%) |
|
Bengaluru |
177 |
25% |
15% |
140 |
27% |
4% |
|
Chennai |
92 |
13% |
30% |
29 |
6% |
-57% |
|
Hyderabad |
131 |
19% |
11% |
145 |
28% |
7% |
|
Mumbai |
126 |
18% |
50% |
73 |
14% |
170% |
|
Kolkata |
06 |
1% |
-36% |
00 |
0% |
-100% |
|
Pune |
86 |
12% |
23% |
59 |
11% |
11% |
|
NCR |
89 |
13% |
-14% |
69 |
13% |
30% |
|
Total |
707 |
100% |
16% |
515 |
100% |
7% |
Source: Vestian Research
Shrinivas Rao, FRICS, CEO, Vestian said, “IT-ITeS sector continued
to dominate leasing activities during 2024 with 36% share. The share has
increased from 24% a year earlier. While IT industry is expected to lead in
2025 on the back of strong demand from GCCs, other segments such as BFSI and
Flex Spaces are also anticipated to garner traction.”
Rao further added, “Emphasis on sustainability has grown among occupiers
as several multinational companies with offices in India have pledged to
achieve net-zero emissions, leading to a rise in demand for green-certified
office spaces in India. Anticipating this shift, leading developers are
prioritizing the construction of sustainable office buildings.”
City-wise Analysis
·
Bengaluru dominated the absorption with 177 lakh sq ft in 2024, registering an
increase of 15% over the previous year. However, the share remained stable at
25% compared to last year.
·
The share of Mumbai in pan-India absorption increased from 14% in 2023 to 18%
in 2024 whereas the share of NCR declined from 17% to 13% during the same
period. The share remained largely stable for the rest of the cities.
·
Southern cities (Bengaluru, Chennai, and Hyderabad) accounted for 57% of the
pan-India absorption in 2024. The share marginally increased from 56% in 2023.
·
Hyderabad reported the highest new completions of 145 lakh sq ft in 2024,
closely followed by Bengaluru with 140 lakh sq ft. Interestingly, Kolkata
witnessed no new completions during 2024 as compared to over 10 lakh sq ft of
supply in the previous year.
· New
completions increased by 170% in Mumbai, the highest amongst the top seven
cities. Conversely, new completions were reduced by 57% in Chennai during 2024.
About Vestian:
Vestian is an occupier-focused workplace solutions firm specializing in commercial, residential, industrial, retail and hospitality sectors. Headquartered at Chicago, Vestian has offices across US, India, China, UK, Sri Lanka and the Middle East. Our core strength lies in providing customized innovative solutions that are aligned to the client's business objectives. Our extensive service portfolio includes Investment & Consultancy Services, Transaction Advisory Services, Project Services, Retail Business Solutions and Integrated Facilities Management Services.
Vestian
is the only global workplace solutions organization to be certified in both
quality management systems and environmental health & safety standards such
as ISO 9001, ISO 14001, ISO 45001 and ISO 37001. For further information on the
company, you can visit us at www.vestian.com
