Colliers’ report reveals an 11% rise in office space demand in India for H2 2024, led by technology and flex space firms, particularly in Bengaluru and Hyderabad. New supply grew by 7%, and vacancy rates remain stable at 17%. The outlook for 2025 is positive, with anticipated demand solidification and robust market dynamics.
In the second half of 2024, demand for office space in India rose by 11% year-on-year, largely driven by technology and flexible space companies, according to a report from Colliers. The cities of Bengaluru and Hyderabad emerged as leaders in office market activities, significantly contributing to this growth.
The report highlights that the supply of office space also increased, registering a 7% year-on-year rise, consistent with the increased demand. It is forecasted that demand is likely to further solidify in 2025 due to a diversification of the occupier base, particularly the expansion of global capability centers.
Colliers’ report, titled “Asia Pacific Office Market Insights H2 2024 and Outlook 2025,” indicates that corporate expansion and a return-to-office trend will continue to fuel a significant increase in demand for office space across the Asia Pacific region. In India, technology and flex space companies accounted for 46% of the total office space take-up in the top six cities during H2 2024.
New office space supply remained robust, with over 2.81 million square meters (30.3 million square feet) completed in the second half of 2024—a 7% increase year-on-year. Both Bengaluru and Hyderabad collectively drove more than half of India’s demand and supply for Grade A office space.
Despite a surge in new leasing activity, vacancy rates within India’s office sector remained stable at approximately 17%. Arpit Mehrotra, Managing Director of Office Services at Colliers India, stated that India experienced a 7% year-on-year growth in new supply, constituting 60% of the Asia Pacific’s new supply during the period. Positive demand-supply dynamics are anticipated for 2025, backed by balanced economic growth and potential inflation moderation.
Vimal Nadar, Senior Director and Head of Research at Colliers India, emphasized India’s position as a leading office market in the Asia Pacific, commanding over 70% of the leasing market and 60% of new supply in H2 2024. He noted that a strong domestic leasing environment, along with elevated demand for Grade A space from Global Capability Centers (GCCs), significantly drives office demand. During H2 2024, GCCs leased 1.4 million square meters (approximately 15 million square feet) of office space, representing over 40% of overall leasing activity due to factors such as rental advantages, an abundance of skilled professionals, and language skills supporting the growth of GCCs and outsourcing hubs in India.
In conclusion, the report from Colliers indicates a robust demand for office space in India propelled by technology and flexible space companies, particularly in Bengaluru and Hyderabad. An anticipated increase in supply and stability in vacancy rates are signs of a healthy office market. As the trend towards corporate expansion and the growth of Global Capability Centers continues, India remains a dominant player in the Asia Pacific office space landscape going into 2025.
Original Source: www.tribuneindia.com
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