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In its latest report ‘India Real Estate Q3 2023’, premier real estate consultancy, Knight Frank India cited that the top eight markets of India has recorded office transactions of 16.1 million square feet (mn sq ft) recording a growth of 17% YoY during Q3 2023. The elevated demand in the Indian office market reflects the confidence of occupiers as India continues to see economic stability despite global uncertainties. Global corporates have shown an increased commitment to their India operations by setting up or expanding their Global Capability Centres (GCC) in India which constituted 44% of the office transactions in the country. The comparatively brisk Indian economy continued to propel the India-Facing businesses or domestic corporations which constituted 37% of the office transactions accounting to 6 mn sq ft in Q3 2023. With 3.2 mn sq ft of transactions, Mumbai was the most active office market during Q3 2023 accounting for 20% of the total transactions during the period

New office completions in Q3 2023 were recorded at 11.5 mn sq ft across the eight Indian cites led by Hyderabad accounting for 46% of the additional office space delivery with 5.3 mn sq ft, followed by Bengaluru with new office supply of 4.0 mn sq ft. Mumbai is the market with highest office rental at INR 113/sq ft/month, and Kolkata records the highest rental appreciation of 10% during the quarter.

Shishir Baijal, Chairman & Managing Director, Knight Frank India said, “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. Occupier demand has trended up well over the year and looks to be on course to exceed levels seen in the previous year. It is the broader economic forces of inflation and GDP growth that will take centre-stage in shaping the fortunes Indian office market in the next few month.”

Representing a healthy growth of 17% YoY, the Indian office market witnessed 16.1 mn sq ft of office transacted during Q3 2023. Notably, Mumbai and Pune reached their highest quarterly transacted volumes since 2018, at 3.2 mn sq ft and 3 mn sq ft respectively. With transaction volume of 2.9 mn sq ft, Hyderabad market has scaled a near three-year high in terms of quarterly transacted volumes on the back of the long-awaited supply which became available during the quarter.

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.

GCCs and India-Facing businesses dominate the leasing activities during Q3 20232023

 India’s resilient office market performance was led by the heightened activities by occupiers setting up Global Capability Centers (GCC) across markets. GCCs constituted 44% of the demand during the quarter as opposed to an average of 21% since Q1 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 continued to anchor the market and constituted 37% of the area transacted at 6.0 mn sq ft during Q3 2023. The activity in this segment was highest in Mumbai with 2.7 mn sq ft, followed by NCR with 1.33 mn sq ft and Bengaluru with 0.7 mn sq ft.

The occupier activities of Flex spaces and Third-Party IT Services was recorded at 1.79 mn sq ft and 1.2 mn sq ft, respectively. Flex spaces saw lower uptake due to lower speculative leasing in the quarter while the third party IT Services continued its trend of slower office consumption

End-use split of transactions in Q3 2023

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