June 22, 2023: Amid the country’s booming demand for premium workplaces across Tier-1 cities, Grade-A offices in India crossed a significant milestone of 700 million square foot (msf), according to a report jointly launched by industry body Credai and CRE Matrix. This segment will reach a billion sqft by 2030, it says, owing to strong industry fundamentals and sustained demand. The study also reveals that co-working, which has seen tremendous growth in the past five years, crossed its own milestone of 50 msf, contributing to about 7% of total office inventory in top 6 cities of India.
The report stresses on the key drivers behind this sustained growth ─ low-cost advantage, competitive wages and strong talent pool ─ leading to higher growth rentals signed in first quarter of 2023, witnessing a rise of 5% from the average Rs 92 per square foot (psf) across top-6 cities in India, the second highest in the last 10 quarters. Despite this increase, 2023 is expected to witness leasing demand of more than 45 msf in the respective regions, with Bangalore and Mumbai Metropolitan Region projected to continue to lead this wave in the second half of the year, with demand exceeding the supply in both markets in Q12023. Both Bangalore and MMR also accounted for 55% to overall India’s office demand in the same quarter.
Apart from co-working, IT/ITes, BFSI industries have witnessed a hike in demand for expansion, spurred on by start-ups and global capacity centres. Due to the same, overall vacancy in top 6 cities came down to 16.7% – lowest in the last 6 quarters.
CREDAI president Boman Irani said: “The consistent growth of the Indian commercial real estate sector is highly commendable. This growth can be attributed to several factors, including the country’s strong economic fundamentals, the rise of new-age industries, and the increasing influx of multinational corporations. We have witnessed the emergence of innovative office designs, state-of-the-art infrastructure, and advanced technology integration, all contributing to the attractiveness of our commercial properties. India’s office stock has crossed a monumental milestone, surpassing 700 msf. This remarkable accomplishment demonstrates the robust growth and immense potential of our nation’s commercial real estate market. In addition to this significant milestone, I am thrilled that India’s co-working space has expanded rapidly, reaching an impressive 50 msf. This achievement is a testament to the evolving nature of the workplace and the increasing demand for flexible and collaborative work environments. It also underscores our successful efforts in catering to modern businesses’ changing needs and preferences.”
Abhishek Kiran Gupta, CEO CRE Matrix and IndexTap, said “The 700 msf milestone is a significant one as the last 5 years have seen 25% of this 700 msf stock come to life. Apart from India’s strong economic fundamentals, the rise of new-age industries, and the increasing influx of multinational corporations, our office developers have been extremely innovative and ESG-conscious to keep the buildings at par with global standards. The proof lies in the strong rental growth witnessed despite flattish demand in this quarter.”
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