Resilience and Growth: India’s Office Real Estate Market Q2 2023 Report, Cushman & Wakefield


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    Amidst global economic uncertainty, India’s office real estate market showcased remarkable resilience and growth in the second quarter of 2023. The latest market report from Cushman & Wakefield India Research paints a vivid picture of the trends, challenges, and opportunities that have shaped the landscape.

    Leasing Activity and Demand

    Delhi NCR emerged as the frontrunner, commanding the highest gross leasing volumes in the quarter, closely followed by Pune, Bengaluru, and Mumbai. The Information Technology and Business Process Management (IT-BPM) sector held the reins in quarterly leasing, accounting for the largest share. Engineering & manufacturing, BFSI (Banking, Financial Services, and Insurance), and flexible workspaces also played pivotal roles, contributing to a diversified leasing portfolio.

    Despite a 22% year-on-year contraction in gross leasing volume, the Indian office market managed to achieve an impressive 11% growth on a quarterly basis. The ability to maintain positive momentum amid global economic turbulence attests to the resilience of the market, as office demand remained sturdy.

    Supply and Vacancy Trends

    New completions during Q2 2023 experienced a remarkable rebound, surging by 71% on a quarterly basis. Pune, Bengaluru, and Chennai were at the forefront of this growth, reflecting developers’ renewed confidence as the demand for office space showed signs of steady recovery. The market witnessed a revival of stalled projects and a surge in speculative supply, with developers seeking to capitalize on the robust performance of the Indian office real estate market compared to global counterparts.

    Despite these strides in supply, the rising influx of available office space led to an increase in vacancy rates across key markets. This trend was primarily driven by the introduction of substantial new supply and the strategic consolidation or relocation efforts of certain occupiers. While select micromarkets experienced the positive effects of this trend, others faced the challenge of rising vacancies, underscoring the need for a strategic approach to match supply with demand.

    Net Absorption Dynamics

    While the leasing volume displayed robustness, net absorption took a 20% hit on a quarterly basis, with certain cities witnessing exits due to office consolidation or relocation strategies. Notably, Hyderabad emerged as a leader in net absorption, followed closely by Delhi NCR and Pune. This trend highlights the evolving nature of workspace requirements and the impact of dynamic business strategies on real estate demand.

    Trends in Leasing and Occupier Preferences

    The IT-BPM and engineering & manufacturing sectors continued to dominate leasing volumes, reinforcing the trend observed in recent quarters. A surge of smaller-sized deals, especially those under 50,000 square feet, marked the quarter. These deals were instrumental in buoying the overall leasing activity. Bengaluru took the lead in fresh leasing volumes, followed by Delhi NCR and Hyderabad, indicating sustained demand for quality workspace.

    The growth of flexible workspaces remains a notable highlight, as the quarter witnessed a record post-COVID high in the number of seats leased. The momentum in this segment underlines the adaptability of businesses and the growing emphasis on hybrid work models, wherein flexible workspace solutions offer an agile alternative to traditional office setups.

    Market Outlook and Prospects

    The second quarter of 2023 has seen an ongoing global economic uncertainty that has gradually begun to mitigate. This positive development bodes well for India’s office real estate market, as it influences US occupiers’ sentiments and global investment trends. However, the market’s strength also derives from domestic market activity, which has contributed to a robust leasing volume during the first half of the year.

    With approximately 33 million square feet of leasing volume in H1-23, accounting for 46% of the total volume recorded in the successful year of 2022, the market demonstrated its ability to maintain momentum. Smaller-sized deals gained traction, and the increased involvement of domestic firms further fueled this growth. As the Indian economy projects a robust growth outlook, occupiers are actively seeking expansion opportunities, further propelling the market forward.

    Although rising supply has led to increased vacancies in various markets, particularly those receiving large influxes of new office spaces, the Indian market’s overall resilience continues to shine. While this rise in supply poses challenges in certain micromarkets, the stable momentum in leasing and strategic demand for quality workspace has contributed to sustained growth.

    Green Focus and Long-Term Resilience

    Beyond the immediate trends, the focus on Environmental, Social, and Governance (ESG) principles is gaining prominence in the Indian office real estate market. The shift towards green-certified and wellness-certified buildings reflects a changing landscape where occupiers prioritize sustainable, environmentally conscious spaces. According to a Cushman & Wakefield occupier survey, a significant number of businesses are willing to pay a premium for buildings that align with ESG norms. This trend underscores the importance of sustainable practices and their potential impact on real estate choices.


    India’s office real estate market has weathered the challenges posed by global economic uncertainty with resilience and vigor. The market’s ability to sustain growth, coupled with its response to evolving occupier preferences, underscores its adaptability and potential for future expansion. As supply and demand dynamics continue to evolve, the market’s trajectory is poised to align with sustainable practices, further cementing its position as a crucial driver of economic growth.


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