Southern Cities of India absorbs 61% of office spaces in India during Q1 FY2024

The commercial real estate in India started boosting in the first quarter of 2024, after witnessing the increment 13.40 million sq ft from 11.85 million sq ft same quarter of last year. In the first quarter of 2024(Jan-Mar) the commercial market exhibited a 13% increase in absorption. Somehow, this state changed and declined by 31% on quarterly basis.

The cities in south India, Hyderabad, Chennai, and Bengaluru cover almost 61% of the pan-India absorption in the first quarter of 2024 which was accounted 54% during the last year. This absorption got doubled in a year in Chennai, and Mumbai, while in Hyderabad it went up to 51%. Other cities in India saw a decline in the same period.

The IT and ITes sector has dominated with 47% of the absorption followed by the BFSI sector with 11% share. Flexible office spaces are attracting interest from large conglomerates 8 % of the pan-India absorption in 2024.

More new projects in of the same trend and saw an annual increase of 26%, reaching 10.8 million sq ft in the first quarter. 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.

Recently, the vacancy rate is 13.8% which will improve the demand of commercial spaces in the second half of 2024 due to the upcoming demand of Back to Office concept.

Shrinivas Rao, FRICS, CEO, Vestian, a US based workplace solutions firm, “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.”