India’s commercial real estate market experienced positive momentum in the first half of 2024, driven by rising occupier sentiment, robust economic growth, and ongoing infrastructure developments. Across key cities like Mumbai, NCR (National Capital Region), Bengaluru, Chennai, Hyderabad, Kolkata, and Pune, demand for office spaces continued to rise as businesses adapted to evolving work models and the economy showed signs of recovery.
Mumbai: Optimism Fueled by Infrastructure Growth
Mumbai’s commercial real estate market remained optimistic in H1 2024, as economic conditions improved and occupancy rates rose. Key infrastructure projects, including the much-anticipated BKC metro line, are expected to further boost market activity. With rising demand for office spaces in prominent business districts like Bandra-Kurla Complex (BKC) and Nariman Point, Mumbai is set to maintain its position as one of the top commercial hubs in India.
NCR: Gurugram and Noida Show Strong Growth
The NCR region, particularly Gurugram and Noida, saw a surge in occupier interest, with several new office locations attracting significant demand. In Gurugram, popular office hubs such as DLF Cyber City, Golf Course Extension Road, NH-48, and Udyog Vihar were hotspots for office leasing activity, leading to several high-profile deals. In Noida, sectors like 135, 142, and 18, particularly along the Noida-Greater Noida Expressway, also witnessed an uptick in demand for office spaces.
The region’s diverse office offerings, along with its proximity to Delhi, make NCR a preferred destination for businesses, especially in the IT and services sectors.
Bengaluru: Steady Demand Despite Temporary Supply Hold
Bengaluru’s office market continues to show strength, buoyed by its status as a tech and startup hub. Although some office supply has been temporarily delayed due to the 2024 Lok Sabha elections, the city’s long-term demand for office spaces remains strong. Ongoing infrastructure investments, such as the expansion of metro lines and the development of new office clusters, are expected to support continued growth in the sector.
Bengaluru remains a key player in the Indian commercial real estate landscape, with strong demand from technology, startup, and e-commerce sectors ensuring a steady pipeline of leasing activity.
Chennai: Affordable and Growing Demand for Office Spaces
Chennai’s office market remains competitive, benefiting from a strong economy, skilled workforce, and well-established infrastructure. The city offers lower occupancy costs compared to other major markets, making it an attractive choice for businesses. As a growing business hub, Chennai’s office market continues to experience steady demand, driven by both domestic and international occupiers seeking affordable and quality office spaces.
Chennai’s cost advantage, coupled with its strategic location in South India, positions it as a key player in the regional commercial real estate market.
Hyderabad: IT Sector Drives Office Leasing Demand
Hyderabad is witnessing growing demand for office spaces, largely driven by the city’s high quality of life, extensive infrastructure, and influx of talent. The resurgence of the IT sector in 2024, along with increased hiring by Global Capability Centers (GCCs), is expected to further boost commercial leasing demand in the city.
However, despite rising demand, an expected oversupply of office spaces in the coming years could temper rental growth. Still, Hyderabad’s real estate market remains strong, especially as it continues to attract businesses and professionals from across the country.
Kolkata: Rental Increases as Demand Surges
Kolkata’s office market saw a rise in average office rents during the first half of 2024, particularly in key locations such as Rajarhat (New Town) and Salt Lake City Sector V. Rents in these areas increased by 9% and 6% year-on-year, respectively, driven by strong demand from businesses and limited availability of quality office spaces. The demand for modern office spaces in these growing commercial hubs has made Kolkata an increasingly attractive market for both occupiers and investors.
Pune: Rise of Flexible Workspaces
Pune’s office market is seeing the rise of flexible workspaces, driven by the growing startup ecosystem and the widespread adoption of hybrid work models. Traditional businesses are also demanding more office spaces as they adapt to post-pandemic business environments. Pune’s dynamic market, with a blend of corporate and startup tenants, is making it a thriving hub for office leasing.
The demand for flexible office spaces, combined with the city’s strong economic fundamentals, positions Pune as one of the key commercial real estate markets in India.
Conclusion
The first half of 2024 reflects a positive outlook for India’s commercial real estate sector, with demand continuing to rise across key markets. Infrastructure developments, favorable economic conditions, and changing work patterns are driving leasing activity in major cities like Mumbai, NCR, Bengaluru, Chennai, Hyderabad, Kolkata, and Pune. As businesses adapt to new working models and the economy recovers, the commercial office market in India is expected to remain strong, with long-term growth prospects across these key cities.
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