Synopsis
India's office sector is thriving, achieving a record leasing of 70.7 million sq ft in 2024 with a 16% annual growth, according to a Vestian report. This growth contrasts starkly with declines in major global cities, showcasing India's resilience and attractiveness for global firms.Key Takeaways
- India achieved record leasing of 70.7 million sq ft in 2024.
- Annual growth reached 16%, driven by affordable rentals.
- Contrasts with global cities facing rental declines.
- Strong demand from IT sector and GCCs fuels growth.
- Rental rates increased by 3.8% to 8.2% in 2024.
New Delhi, April 10 (NationPress) While global office rental markets are grappling with challenges, India’s office sector is demonstrating resilience with consistent growth in office leasing and rental rates, as highlighted in a report by the real estate firm Vestian published on Thursday.
The report reveals that India achieved a record leasing of 70.7 million sq ft in 2024, marking a significant annual growth of 16 percent. Affordable rental prices across India’s leading seven cities have contributed to this positive trend, positioning the country as a notable exception in a generally sluggish global environment.
In contrast to leading global cities such as New York, Seattle, Boston, Hong Kong, and Shanghai, which have experienced declines in rental prices over the past five years, India continues to show a steady upward trajectory.
Interestingly, while some Western markets like London and Miami recorded increases of 31 percent and 53 percent respectively, the overall global sentiment indicates a slowdown driven by rising vacancy rates and evolving workplace strategies, according to the report.
The Indian office market is anticipated to sustain this growth trend moving forward, primarily fueled by robust leasing activity, favorable demographics, and strategic infrastructure advancements, the report notes.
Shrinivas Rao, CEO of Vestian, stated that the downturn in global office space rents is influenced by advancements in technologies such as generative AI and shifts in office space utilization.
These elements are contributing to the uncertainty faced by the office sector.
The combination of decreased demand, along with businesses downsizing or relocating, has resulted in increased vacancy rates worldwide, thereby exerting downward pressure on rents.
Moreover, in 2024 alone, rental rates in major Indian cities escalated between 3.8 percent and 8.2 percent compared to the previous year.
India maintains its resilience, driven by strong demand from the IT sector and Global Capability Centers (GCCs). While global cities continue to attract demand for premium office spaces, India’s affordability and expansion-oriented leasing distinguish it. As a cost-effective center, India is poised for consistent growth.
Rao mentioned that the influx of new businesses and company expansions has created significant demand for office spaces in India.
Global firms are actively pursuing office space in the country due to robust economic growth compared to other major economies, a rich demographic dividend, a large consumer base, rapid urbanization, and the easy availability of a skilled workforce at competitive rates, especially in technology and finance. This demand is driving the necessity for high-quality office spaces.
Prominent commercial areas like Mumbai's BKC and Delhi's Central Business District, including Connaught Place and nearby regions, command high rents, with average costs reaching $3-4 per sq ft per month.
Strong economic activities, upcoming mega infrastructure projects, and the growth of GCCs continue to propel rental appreciation across major cities in India, as highlighted in the Vestian report.
