Bengaluru’s Commercial Market Sees Strong Growth

Bengaluru’s commercial real estate sector experienced strong demand, leading to lower vacancy rates due to a supply shortfall. Along key business corridors, rental and capital rates for Grade A office spaces saw a significant increase. The Outer Ring Road (ORR), North Bengaluru, and Whitefield emerged as key locations for high-value transactions, driven by the availability of well-specified floorplates. Capitalization rates for these areas remained stable in the range of 8.0% to 8.5%.

Additionally, Bengaluru’s organized retail sector witnessed an uptick in transaction volumes, with capital values rising in high street areas. This increase is attributed to heightened consumer spending during the festival season, leading to stronger revenue shares for retailers.

Mumbai’s Commercial Real Estate Market Expands

Mumbai’s office market recorded a sixfold increase in supply year-on-year, yet the overall demand outpaced new inventory, resulting in a robust market. The demand for office space saw the highest quarterly growth in 2024, though rising supply prevented significant rental hikes except in select micro-markets where availability remained limited.

While the industrial real estate segment in Mumbai recorded a 15% supply increase, transaction volumes were slightly lower compared to the previous year. This led to stable cap rates in Q4 2024.

Macroeconomic Trends and Inflation Impact

Inflationary pressures were evident, with Consumer Price Index (CPI) inflation rising to 5.22% in December 2024, compared to a three-month average of 5.63%. This was largely attributed to rising urban inflation in Q3 2024, impacting economic dynamics across the region.

Ajay Sharma, Managing Director, Valuation Services, Colliers India, commented on the findings: “The rising transaction volumes in Bengaluru’s organized retail sector and strong demand for commercial space across key markets indicate sustained business confidence. Mumbai’s industrial segment saw increased supply, which helped keep cap rates stable, while Bengaluru’s Grade A office market saw strong demand pushing capital values upward.”

Outlook for 2025

As interest rates continue to decline and economic activity remains strong, the commercial real estate markets in Mumbai and Bengaluru are expected to maintain their growth trajectory. With consumer spending rebounding, particularly in retail and office sectors, investors and developers are likely to see continued demand for prime assets across key business hubs.

Also Read: Colliers assists Pinnacle, in setting up first office in Hyderabad

The post Business Confidence Rises as Demand Grows and Interest Rates Decline: Colliers APAC Cap Rate Report Q4 2024 appeared first on Square Feat India.

India’s office market has achieved a groundbreaking milestone in 2024, registering a record 49.56 million square feet (sq. ft.) in net absorption, marking a historic high. The year culminated with an extraordinary fourth quarter (October-December 2024), which saw net absorption hit 18.53 million sq. ft., the highest ever recorded in a single quarter.

The performance of India’s top seven cities—Bengaluru, Chennai, Delhi NCR, Hyderabad, Kolkata, Mumbai, and Pune—was exceptional, with Bengaluru maintaining its market-leading position. The city saw its best-ever net absorption of 14.74 million sq. ft. in 2024, reflecting a remarkable 63.6% year-on-year growth. Other key cities also posted impressive growth, with Delhi NCR and Hyderabad recording net absorption increases of 30.3% and 6.1%, respectively.

In total, the four leading cities—Bengaluru, Delhi NCR, Hyderabad, and Mumbai—accounted for 77.8% of the national net absorption in 2024. The surge in leasing activity underscores a strong demand for office spaces, particularly driven by global companies expanding their presence in India.

Record Leasing Volumes and Robust Occupier Demand

The Indian office market also saw record-breaking leasing activity in 2024, with gross leasing volumes reaching 77.22 million sq. ft., a 22.6% year-on-year increase. Global companies played a significant role in driving this growth, accounting for 58.6% of the leasing activity. Global Capability Centres (GCCs) emerged as a major contributor, securing around 28 million sq. ft., representing 35.9% of the leasing volumes.

The fourth quarter of 2024 saw the highest ever gross leasing volume in a single quarter, with 23.80 million sq. ft. leased. Bengaluru led this performance, with 7.87 million sq. ft. leased in Q4, followed by Delhi NCR, Hyderabad, and Mumbai. This surge in leasing was further driven by the rising demand for flexible workspaces, which saw leasing activity in this segment jump by 50% year-on-year.

Bengaluru’s Dominance in the Market

Bengaluru’s dominance in India’s office market was evident in both quarterly and annual figures. In Q4, the city accounted for 36.1% of the total net absorption, with a record-breaking 6.69 million sq. ft. absorbed. Its total net absorption for 2024 was 14.74 million sq. ft., a 63.6% increase from the previous year. Other cities, such as Delhi NCR, Hyderabad, and Mumbai, also saw robust growth, but Bengaluru continued to lead in both net absorption and gross leasing.

Vacancy Rates Decline

The vacancy rate across the top seven cities dropped to a three-year low of 16.3%, down by 60 basis points quarter-on-quarter. This decline is a result of the historic net absorption figures, supported by a balanced supply of office space. Vacancy rates fell across most cities, with the exception of Pune.

Looking Ahead: Continued Growth on the Horizon

India’s office market is poised for continued growth in the coming years. The expansion of GCCs, driven by a focus on AI, emerging technologies, and R&D, will continue to fuel demand for office space in core markets. The growth of flexible workspaces and increasing demand from sectors like financial services, manufacturing, and tech outsourcing will further bolster the market. India’s position as a key hub for global companies, particularly in the areas of talent availability and innovation, positions it for sustained office market success.

With strong performance across major cities and the continued influx of global occupiers, India’s office market is expected to maintain its upward trajectory in 2025 and beyond.

Also Read: 87% of Indian occupiers want half of office portfolios powered by renewables by 2030

The post India’s Office Market Reaches Record Heights in 2024, Surpassing 49 Million Sq. Ft. in Net Absorption appeared first on Square Feat India.