India’s office space absorption surged 30% year-on-year in the first nine months of 2024, reaching 55.1 million square feet across six key cities, according to Savills India. This spike in demand is expected to push total office space absorption past 70 million square feet by year-end, with projections between 70 million and 74 million square feet.
As published by the Money Control, Savills India’s data indicates that the January-September period of 2024 set a new record, leaving just 7 million square feet needed to surpass the total absorption recorded in 2023. In the third quarter alone, absorption hit 20.2 million square feet, up 28% from the same quarter last year. Bengaluru, Delhi NCR, and Mumbai accounted for 66% of the total leasing activity during this period.
The growth reflects a robust business environment, said Naveen Nandwani, managing director for commercial advisory and transactions at Savills India. “With employees returning to physical offices, demand has surged across all segments, including tech,” Nandwani said. “We anticipate this momentum will carry into the final quarter, potentially driving absorption levels to a new record.”
By sector, IT and business process management led with 29% of total leasing in Q3 2024, followed by flexible workspaces (23%) and banking, financial services, and insurance (BFSI) (22%). Large deals, accounting for 50% of leasing activity, were especially prominent in Bengaluru, Delhi NCR, and Pune.
Despite high demand, new office space supply fell by 12% year-on-year to 32.6 million square feet in the first nine months of 2024, resulting in a drop in vacancy rates to 15.5% by the end of September.
Bengaluru led the market with a year-to-date absorption of 15.9 million square feet, a 49% jump over the previous year. The city is projected to reach a record gross absorption of 20 million square feet by year-end.
In Mumbai, year-to-date absorption was 9.7 million square feet, with forecasts suggesting a peak of 12 million square feet for 2024—a decade-high figure. Delhi NCR’s absorption, however, declined 6% year-on-year to 7.6 million square feet, although it is expected to close the year at 11-12 million square feet.
Hyderabad posted 8.7 million square feet in year-to-date absorption, a 34% increase year-on-year. Pune’s year-to-date figure stood at 6.6 million square feet, with projections reaching 9 million square feet by the end of 2024.