India’s office leasing surges by 35% during first quarter of 2024

V Nagarajan

Although this is a significant drop from the record office space take-up in the last quarter of 2023, the remarkable annual increase is indicative of upbeat occupier sentiment, given the fact that the first quarter will be typically slower. Bengaluru and Hyderabad emerged as frontrunners for demand of Grade A office space in Q1 2024, cumulatively accounting for more than half of the India leasing activity.

The office market of Hyderabad especially demonstrated a strong momentum with 2.2x space uptake in Q1 2024 as compared to the corresponding quarter last year.

This demand was driven by healthcare and pharma and technology sectors. Amongst other major office markets, Mumbai too experienced a notable surge in leasing activity, an impressive 90% YoY rise in Q1 2024.

“Hyderabad continues to strengthen its role as a prominent commercial office market in the country. The city offers occupiers including Global Capability Centers considerable price arbitrage compared to other markets. Furthermore, proactive government policies, continuous infrastructure upgrades and a favorable business ecosystem makes Hyderabad a compelling destination for investors, occupiers, and leading developers of commercial real estate in India.

Within Hyderabad, the trifecta of Hi-Tec City, Gachibowli and Madhapur continued to drive leasing activity in Q1 2024. Of the 2.9 million square feet of Grade A space uptake in the first quarter, over 80% of the demand was concentrated in these three localities.” says Arpit Mehrotra, Managing Director, Office services, India, Colliers.

During Q1 2024, new supply across top six cities remained steady, at 9.8 million sqft, almost at par with the level seen in Q1 2023.  Bengaluru witnessed significant new project completions, contributing to 45% of the total new supply, followed by Hyderabad at 27% share. With demand outpacing supply, average rentals saw up to 8% uptick on a YoY basis across most of the major markets.

Vacancy levels, meanwhile, are expected to remain steady, hovering around 17.3% by the end of Q1 2024.

Sectors drive space uptake: “Driven by strong domestic occupier activity across technology and engineering & manufacturing sectors, the first quarter of 2024 signals a strong start for India’s office market. During Q1, occupiers from technology, engineering and manufacturing, and BFSI sectors collectively accounted for 58% of total leasing activity across the top six cities. This momentum, coupled with the resurgence in GCC demand, sets the stage for the rest of the year. Healthy demand supply dynamics are likely to prevail throughout 2024. As business sentiments and economic outlook remains positive, domestic occupiers, especially will continue to drive the office market of the country,” says Vimal Nadar, Senior Director and Head of Research, Colliers India.

During Q1 2024, the demand for office space across the top six cities continued to remain broad-based. At 2.8 million sqft, engineering & manufacturing leasing soared to over 2.3x times in Q1 2024 compared to the first quarter of 2023. Bengaluru accounted for about 55% of the activity in the sector, underscoring occupiers’ continued preference for the market. BFSI and flex space too continued their healthy space take up across most cities, garnering 14% and 13% share, respectively in overall India leasing for Q1 2024.

We are in the process of selling our deceased father’s property in India with two legal heirs. Since I am unable to travel, can a power of attorney resolve the situation to close the deal?  Ricky Thomas, Sharjah.  

Yes. You will have to get attestation of the specific power of attorney in the Gulf with the Indian consulate.  You may grant PoA to either of the two legal heirs in India for the purpose of executing and registration of sale deed.  Once it is received in India, it has to be stamped and signed with the appropriate stamp duty.

I bought residential and commercial properties using local funds while in India.  A portion of them have been gifted to my relative who is living in Gulf.  Can he sell and repatriate the sale proceeds?  Please clarify.  Madhav Bodas, Dubai.

The Reserve Bank has allowed authorised dealers of foreign exchange to permit repatriation even in respect of properties which were not acquired with foreign funds but held by NRIs in India either by inheritance or gift.  Repatriation of sale proceeds of such properties is permitted out of NRO account of an amount upto $1 million per financial year subject to the payment of applicable taxes in India.