Indian office market surges to its best-ever first half in 2024

India JLL
Dr. Samantak Das, Chief Economist and Head of Research and REIS, India, JLL (Credit: JLL)

In Q2 2024, India’s all top seven cities (Mumbai, Delhi NCR, Bengaluru, Chennai, Kolkata, Pune, and Hyderabad) recorded gross leasing volumes of at least 1 million sq. ft., amid strong leasing activity, according to a recent JLL report.

The second quarter gross leasing was up 21.3% Q-o-Q and was recorded at 18.38 million sq. ft. The last four consecutive (Q22024, Q12024, Q42023 and Q32023) quarters have now exceeded the 15 million sq. ft mark in gross leasing volumes, underpinning the strong momentum in the office market.

This quarter 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. Furthermore, H1 2024 (January to June) marked the best-ever first half, with leasing volumes at 33.5 million sq. ft, surpassing the previous highest H1 performance seen in 2019, the report said.

Bengaluru led the charge, accounting for a 33% share of the quarterly gross leasing, followed by Delhi NCR with a 20.7% share.

“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. In Q2, global occupiers accounted for a significant 59.3% share of gross leasing volumes. Nevertheless, domestic occupiers continue to show strong momentum, representing a 48.4% share of India’s gross leasing activity since 2022. This is a notable increase from the ~35% average share in the three-year period from 2017 to 2019. While global occupiers remain bullish on expanding and growing their operations in India, a strong domestic economy is creating resilience in the office market,” said Dr. Samantak Das, Chief Economist and Head of Research and REIS, India, JLL.

Tech saw its strongest performance in two years, with its share of Q2 gross leasing at 31.5%. BFSI also had a strong showing, accounting for a 20.3% share, followed by the manufacturing/engineering segment with a 17.3% share. Flex operator activity remained resilient with a 14.6% share of leasing activity in Q2. This segment remains on track to match its previous historic highs.

Looking ahead, the report from JLL India predicts that the country’s growth momentum will continue to be driven by GCCs, both existing ones expanding their footprint and new ones entering the country across varied segments. There is a clear broad basing of GCC activity with high-end tech and BFSI now being supplemented by growth across engineering, design, and manufacturing sectors. Domestic occupier activity is expected to be shored up by flex operators, financial services, third-party tech outsourcing firms and manufacturing/industrial players. The year 2024 is projected to mark record breaking gross leasing of 65-70 million sq. ft, setting the stage for a historic milestone in the country’s commercial real estate market, JLL concludes.

(Source: Real Estate Intelligence Service (REIS), JLL Research)