India’s Grade A/A+ office market registered 62 msf of demand in CY’23, demonstrating resilience despite global uncertainties. As highlighted in the CRE Matrix & CREDAI India Office Report Q1 CY’24, average demand during the post-COVID period (2022–2023) stood at 66 msf—marking a 21% increase over pre-COVID levels recorded in 2018–2019.
The IT and BFSI sectors primarily drove this growth. Global companies continued expanding operations, leveraging India’s cost efficiency and deep talent pool. At the same time, startups and SMEs contributed significantly to demand, fueled by rapid digital adoption.
Co-working and Leasing Trends Strengthen
The co-working segment continued to grow steadily. It contributed around 10% of the total office demand. Companies also increased long-term commitments during the year. The weighted average lease term rose 7% to 62 months compared to 2019 levels. This trend reflects stronger occupier confidence and long-term planning.
Rental Growth and Demand Trends Across Cities
Office rentals increased significantly during the quarter. Pan-India Grade A/A+ rents rose by 14.5% year-on-year in Q4 CY’23. Noida, Chennai, and Hyderabad led this rental growth. Rising occupier demand pushed rental values upward.
Pan-India office demand declined by 12% year-on-year in CY’23. However, select cities outperformed the overall market. Pune recorded 25% growth in demand. Chennai followed with 14% growth. BFSI demand and large pre-commitments drove this increase.
India Office Market Fundamentals
India’s office market fundamentals remained stable in CY’23. Total demand stood at 62.2 msf, while supply reached 57.5 msf. The total office stock increased to 820.8 msf. Vacancy levels stood at 17.8%. Under-construction stock reached 238 msf, expected by Q4 2026. Passing rent stood at ₹85.3 per sqft per month. Market rent reached ₹97.1 per sqft per month.
Different sectors contributed actively to office demand. IT/ITeS led with a 26% share. BFSI followed with 17%. Co-working contributed 9%. These sectors continue to shape India’s office leasing landscape.
City-wise Office Market Performance
Bengaluru: Market Leader in Demand
Bengaluru remained India’s top office market. The city recorded 16.1 msf demand in CY’23. Supply stood at 14.4 msf. Total stock reached 220.3 msf. Vacancy remained low at 10%. Passing rent stood at ₹80.4 per sqft per month. Market rent stood at ₹74.0 per sqft per month. IT/ITeS dominated the market with a 47% share.
Delhi-NCR: Supply-Driven Market
Delhi-NCR recorded 9.8 msf demand in CY’23. Supply slightly exceeded demand at 10.1 msf. Total stock reached 164.7 msf. Vacancy remained high at 24.4%. Passing rent stood at ₹87.4 per sqft per month. Market rent stood at ₹82.8 per sqft per month. The market remained supply-heavy during the year.
MMR: Demand Outpaces Supply
MMR witnessed strong demand in CY’23. Demand reached 10.1 msf, while supply stood at only 3.5 msf. Demand remained 2.8 times higher than supply. Total stock reached 141.5 msf. Vacancy improved to 18%. Market rent increased to ₹136.1 per sqft per month. Strong BFSI demand supported this growth.
Hyderabad: Rising Supply and Vacancy
Hyderabad recorded 11.4 msf demand in CY’23. Supply exceeded demand at 17.2 msf. Total stock reached 135.3 msf. Vacancy increased to 24.7%. Market rent stood at ₹70.9 per sqft per month. The market saw strong supply additions during the year.
Pune: High-Growth Market
Pune showed strong growth in CY’23. Demand reached 7.9 msf, while supply stood at 5.4 msf. Demand exceeded supply by 1.5 times. Total stock reached 82.2 msf. Vacancy remained stable at 13.9%. Market rent stood at ₹79.2 per sqft per month.
Chennai: Stable and Balanced Market
Chennai maintained balanced market conditions. Demand reached 7.0 msf, while supply stood at 6.9 msf. Total stock reached 76.2 msf. Vacancy stood at 16.8%. Market rent stood at ₹62.2 per sqft per month. The city showed steady growth with balanced supply and demand.
India’s office market shows strong future potential. Occupiers continue to prefer long-term commitments. Developers are likely to accelerate new supply pipelines. New cities and flexible formats will drive future growth. India’s growth story will continue to attract global occupiers.
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