India office property market surges with record gross leasing in 2024 first half

The Indian office property market has demonstrated robust performance, driven by a resurgence in economic activity and a notable increase in corporate occupancies in the first half of the year, reflecting the sector's resilience and the overall positive business environment.

Driven by technology and banking, financial services and insurance activity related Global Capability Centres (GCCs), global occupiers marked a strong return in the second quarter taking the performance of January-June to a record high.

India’s office market surged to its best-ever first half with gross leasing of 33.5 million sq ft in, up 29% from a year ago surpassing the previous first half record performance of 30.71 million sq ft seen in 2019, showed data from JLL India.

Each of the last four consecutive quarters have now exceeded the 15 million sq ft leasing mark and indicate the potential for 2024 to establish a new peak, surpassing the historic highs seen in 2023.

“In a period of global sluggishness, the India office market remained resilient given its underlying fundamentals. The same factors have now come together to create a period of sustained growth, with India at the forefront of global firms’ real estate decisions and strategies. Strong domestic economy parameters are also fuelling space take-up by home-grown firms. The India office growth story is strongly supported by the remarkable growth shown by GCCs in Q2,” said Rahul Arora, Head (Office Leasing & Retail Services), India, JLL.

According to Arora, India’s leadership position in the GCC ecosystem continues to remain intact, driven by high-end research & development work that supports headcount expansion opportunities for these firms, resulting in strong space demand. He expects gross office leasing in 2024 to be at a new all-time high 65-70 million sq ft.

The gross leasing in the second quarter ending June was up 21.3% sequentially at 18.38 million sq ft. The last four consecutive quarters have now exceeded the 15 million sq ft mark in gross leasing volumes, underpinning the strong momentum in the office market. With a 42.6% share of the total leasing during the quarter, the GCCs continue to remain the dominant occupier group, accounting for over one-third of gross leasing activity so far in 2024.

“As global economic and business conditions stabilize, global occupiers are now more certain of their real estate plans, with India being at the top of their list for footprint expansion and growth,” said Samantak Das, Chief Economist and Head of Research and REIS, India, JLL.

According to Das, in the June quarter, global occupiers accounted for a 59.3% share of gross leasing, domestic occupiers also continued to show strong momentum with 48.4% share of India’s gross leasing activity from 2022. This is a notable increase from the 35% average share in the three-year period from 2017 to 2019.

Driven by strong leasing activity, the June quarter was the first time when all top seven cities including Mumbai, Delhi-NCR, Bengaluru, Chennai, Kolkata, Pune, and Hyderabad recorded gross leasing volumes of at least 1 million sq ft each.

The performance is a testament to the inherent strengths of the India office market, with the strong fundamentals clearly indicating the potential for this year to establish new peaks, surpassing the historic highs seen in 2023.