AI & Robotics companies accounted for 21% of Bengaluru’s absorption in Q2 2024, as per Vestian’s quarterly office market report, The Connect Q2 2024. Rapid global advancement of artificial intelligence, combined with a supportive ecosystem, has significantly driven the demand for office space in the city. Overall, IT-ITeS sector, including AI & Robotics, accounted for 69% of the city’s absorption in Q2 2024.
Bengaluru contributed the highest to pan-India absorption with 25% share in Q2 2024, followed by Hyderabad and Mumbai at 20% each. Pune reported the highest quarterly growth, around 307%, in value terms whereas absorption declined by 48% in Chennai during Q2 2024. NCR also witnessed a quarterly decline of 37% during the above-mentioned period. All the cities except Chennai and NCR reported an increase in absorption on quarter and on year.
Absorption:
| City | Q2 2024 | Q1 2024 | Q2 2023 | Q-o-Q Change | Y-o-Y Change |
| Bengaluru | 4.25 | 2.62 | 3.70 | 62% | 15% |
| Chennai | 1.75 | 3.35 | 2.20 | -48% | -20% |
| Hyderabad | 3.40 | 2.27 | 2.30 | 50% | 48% |
| Mumbai | 3.39 | 2.49 | 1.80 | 36% | 88% |
| Kolkata | 0.23 | 0.16 | 0.10 | 44% | 130% |
| Pune | 2.88 | 0.71 | 1.80 | 307% | 60% |
| NCR | 1.14 | 1.81 | 2.00 | -37% | -43% |
| Total | 17.04 | 13.40 | 13.90 | 27% | 23% |
Note: Data for Grade A Office Space
Source: Vestian Research
IT-ITeS sector dominated absorption with 38% share in Q2 2024, followed by BFSI and Consulting Services at 12% and 10% respectively. Flex Spaces accounted for 8% of the total absorption during the current quarter.
H1 2024 witnessed absorption of over 30 Mn sq ft, registering an uptick of 18% compared to H1 2023. As the demand for grade-A office spaces is robust across the top seven cities of India, the entire year (2024) is expected to cross the 60 Mn sq ft mark again after peaking in 2023.
Absorption reached 17.04 Mn sq ft in Q2 2024, registering an increase of 27% over the previous quarter and 23% over the same quarter a year earlier. The surge could be attributed to improved global macroeconomic scenario and India’s robust growth amid global geopolitical challenges.
Following a similar trend, new completions also increased by 17% in H1 2024 over H1 2023, reaching 23.2 Mn sq ft. Additionally, Q2 2024 witnessed a quarterly increase of 15% and a yearly rise of 10% in new completions. All the cities except Pune and Bengaluru witnessed an uptick in construction activities during the current quarter compared to the previous quarter. Moreover, Mumbai reported 3.3 Mn sq ft of new completions during Q2 2024, registering the highest quarterly rise of 230%.
Bengaluru dominated new completions with 28% share, closely followed by Mumbai with 27%. Southern cities (Bengaluru, Chennai, and Hyderabad) accounted for 57% of the total new completions reported in Q2 2024, however, the share has dropped from 63% a quarter earlier.
New Completions:
| City | Q2 2024 | Q1 2024 | Q2 2023 | Q-o-Q Change | Y-o-Y Change |
| Bengaluru | 3.50 | 3.70 | 3.50 | -5% | NIL |
| Chennai | 0.70 | 0.60 | 2.10 | 17% | -67% |
| Hyderabad | 2.90 | 2.50 | 4.10 | 16% | -29% |
| Mumbai | 3.30 | 1.00 | 0.30 | 230% | 1,000% |
| Kolkata | 0.00 | 0.00 | 0.00 | NA | NA |
| Pune | 0.50 | 1.70 | 0.80 | -71% | -38% |
| NCR | 1.50 | 1.30 | 0.50 | 15% | 200% |
| Total | 12.40 | 10.80 | 11.30 | 15% | 10% |
Note: Data for Grade A Office Space
Source: Vestian Research
Shrinivas Rao, FRICS, CEO, Vestian said, “Despite global geopolitical challenges, India’s office markets reported robust real estate activities during Q2 2024. The quarter has already set the tone for robust leasing and construction activities for the current calendar year.”
Rao further added, “Real estate activities are anticipated to increase further on the back of strengthened demand from IT-ITeS and BFSI sectors. Flex Spaces are also likely to play a pivotal role in the growth of office markets in India.”
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