India’s office rental activity grows 17% in Q3CY23 on country's economic stability despite global woes: Report

Office rental space transactions saw a healthy 17% growth on annual basis during July-September 2023, reflecting the confidence of occupiers on India’s economic stability amid global uncertainties, according to a report by real estate consultancy Knight Frank India’s.  

The top eight markets of India recorded a total of 16.1 million square feet (mn sq ft) office transactions in the calendar year’s third quarter, according to the ‘India Real Estate Q3 2023’ report released on Wednesday.  

Mumbai and Pune reached their highest quarterly transacted volumes since 2018, at 3.2 mn sq ft and 3 mn sq ft respectively. Pune saw the highest year-on-year growth of 319%.  

Hyderabad, with 5.3 mn sq ft, accounted for 46% of the office space delivered during Q3 2023. In total, 11.5 mn sq ft of office space attained completion during Q3 2023 across the leading eight markets of India, the report showed.  

As global corporates have shown an increased commitment to their India operations, Global Capability Centres (GCC) in India constituted 44% of the office transactions in the country during July-September 2023. Their share has more than doubled from the 21% seen during January-March 2022.

The occupier activity in this segment was particularly strong in Pune with 2.4 mn sq ft and Hyderabad with 2.2 mn sq ft, where as much as 81% and 75% of the total area transacted in these markets respectively, was accounted for by GCCs.

India-facing businesses or domestic corporations constituted 37% of the office transactions accounting to 6 mn sq ft in Q3 2023, propelled by a comparatively brisk Indian economy.  

Meanwhile, flex spaces and third-party IT Services saw their shares in total transaction plunged from 22% to 11% and 20% to 8%, respectively.    

Shishir Baijal, Chairman & Managing Director, Knight Frank India, said occupier demand looks to be on course to exceed levels seen in the previous year. “The relative strength of the Indian economy continues to attract global corporate interest and is reflected in the recovering demand in the Indian office space market. The increasing incidence of GCCs being set up in the current quarter also points toward greater occupier commitment to the overall operational and business environment that India offers.”

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