New Delhi. CBRE South Asia Pvt. Ltd, India’s leading real estate consulting firm, today announced the findings of its report ‘CBRE India Office Figures Q4 2023’. As per the report findings, the office sector in India witnessed a gross absorption of 61.6 mn. sq. ft. during 2023 across 9 cities, registering a growth of 7% (Y-o-Y), marking a 4-year high leasing activity after it touched the peak in 2019 with 65 mn. sq. ft. Development completions increased by about 13% Y-o-Y to reach 56.7 million sq. ft., an all-time high during 2023. Developers continued to exhibit their efforts towards sustainability, with nearly half of the newly completed developments during 2023 being green-certified (LEED or IGBC).
As per the report, Bangalore, Hyderabad, and Chennai accounted for nearly 57% of the yearly leasing activity. On an annual basis, BFSI firms drove leasing with a share of (22%), followed by technology companies (21%), engineering & manufacturing companies (15%), and flexible space operators (14%). American multinationals led the leasing activity in the BFSI sector, accounting for about 48% of the total leasing as they leased office space for their global capability centres (GCCs).
Office space take-up was dominated by small- (less than 10,000 sq. ft.) to medium-sized (10,000 – 50,000 sq. ft.) transactions in 2023 with a share of 84%. The share of large-sized deals (greater than 100,000 sq. ft.) in 2023 marginally increased to 7% from 6% in 2022. Bangalore and Hyderabad dominated large-sized deal closures in 2023, followed by Chennai and Delhi-NCR, while a few such deals were also reported in Pune and Mumbai.
Quarter analysis
Oct-Dec’23 period has recorded highest-ever quarterly office leasing at 19.0 mn. sq. ft. Leasing during the quarter (Oct-Dec’23) increased by 16% Q-o-Q and 20% Y-o-Y. Bangalore, Hyderabad and Chennai accounted for nearly 60% of the quarterly leasing activity.
Quarterly office leasing was driven by BFSI players and technology corporates which accounted for a share of 20% each, followed by engineering and manufacturing companies (16%), flexible space operators (12%), research, consulting & analytics firms (5%) and media & marketing firms (5%).
In the quarter (Oct- Dec’23), domestic firms led leasing with a 45% share, primarily led by flexible space operators and BFSI firms. Within the Indian BFSI firms, the space take up was led by commercial banks and insurance firms that increased their appetite for office space as they undertook expansionary activities during the year.
As per the report, new completions increased by 3% Y-o-Y to touch 15.6 million sq. ft. Hyderabad, Bangalore, and Delhi-NCR dominated new completions in Q4 2023 (Oct-Dec’23) with a combined share of 56%.
Anshuman Magazine, Chairman & CEO - India, South-East Asia, Middle East & Africa, CBRE, said, “In 2023, the global economy, while grappling with monetary tightening and geopolitical challenges, fared better than expected. Most major economies managed to avoid a recession, while the Indian economy continued demonstrating resilience in the year gone by. The Indian economy is anticipated to exhibit similar resilience in 2024 as well, led by strong domestic growth and sustained capital expenditure.
The office sector also performed better than expected, with many occupiers finalising deals in the latter half of the year. Driven by steady momentum in enquiries, this demand is likely to remain largely stable during H1 2024. However, we expect demand to pick up momentum during H2 2024, led by clearer visibility of the
Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India, said, “Global firms would also continue to finalise their leasing decisions as they aim to set up or expand their footprint in the country. The office sector is likely to witness expansion by domestic firms from sectors such as banking, financial services, and insurance (BFSI) and engineering and manufacturing, while also seeing growth from other sectors such as life sciences and flexible space operators.
While the demand in the office sector in 2024 is expected to be led by Bangalore, followed by Delhi-NCR and Hyderabad, Chennai and Pune are also being increasingly preferred by occupiers on account of quality supply addition, presence of skilled talent, robust infrastructure, and competitive costs”.
Mohdfaizan.khan@cbre.com,
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