Average rental values across the top 7 Indian cities registered a 7 percent growth in H1 FY 2024, compared to the same period in FY 2023, an industry report said.
New office supply across the 7 cities, however, posted a rise of only five percent during the first half of the current fiscal year, according to data by Anarock Research.
The South Indian city of Chennai witnessed the highest yearly jump in average monthly office rental values at 10 percent, followed by Hyderabad with an 8 percent yearly growth.
Bengaluru, Pune, and Kolkata each saw an annual office rental rise of 7 percent each, while Mumbai and Delhi National Capital Region (NCR) registered a five percent jump each.
“It was widely anticipated that commercial office space demand in India will see a downturn amid layoffs by several large corporate groups worldwide, and shrinking business volumes,” Prashant Thakur, Regional Director & Head – Research, Anarock Group, said.
“However, despite all headwinds, office activity remained largely unchanged in the first half of FY 2024 as compared to the corresponding period in FY 2023,” he said.
In terms of sector-wise net absorption, IT/ITeS continues to dominate leasing transactions in H1 FY 2024.
However, the sector’s overall share in leasing has been on a decline year-on-year – from 46 percent in H1 FY 2020 to 29 percent in FY 2024, the report said.
Consequently, the share of co-working spaces has been on the rise – from 11 percent in H1 FY 2020 to 24 percent in H1 FY 2024, reflecting a shift in the leasing trend by many companies which now see flexible workspaces as a viable and more cost-effective option, the report said.
Anarock Research said while Indian commercial office space demand doubtlessly faces short-term challenges in the current global environment, the mid-to-long-term outlook remains positive, considering that Grade A offices are still available at sub-dollar rents.
Stability in the office market may return from the second half of 2024, it added.
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