{"id":2342,"date":"2024-05-20T16:35:00","date_gmt":"2024-05-20T11:05:00","guid":{"rendered":"https:\/\/www.crematrix.com\/blog\/?p=2342"},"modified":"2026-04-25T18:05:46","modified_gmt":"2026-04-25T12:35:46","slug":"india-office-market-q1-cy24-demand-surges-while-supply-tightens","status":"publish","type":"post","link":"https:\/\/www.crematrix.com\/blog\/india-office-market-q1-cy24-demand-surges-while-supply-tightens\/","title":{"rendered":"India Office Market Q1 CY\u201924: Demand Surges While Supply Tightens"},"content":{"rendered":"\n

India\u2019s office market entered 2024 with strong momentum, as highlighted in the India <\/em>Office Report Q1 CY\u201924<\/a> by CRE Matrix and CREDAI. The report indicates a sharp rise in demand across major cities, even as new supply remained constrained during the quarter. This widening gap between demand and supply pushed rentals upward and reinforced a landlord-favourable market across the country, setting a strong tone for the year ahead.<\/p>\n\n\n\n

Demand Sees Strong Growth Across Key Cities<\/strong><\/h2>\n\n\n\n

India\u2019s Grade A office demand recorded robust growth in Q1 CY\u201924. It increased by 12% compared to the previous quarter and grew 14% year-on-year. The top three cities\u2014Bengaluru, MMR, and Delhi-NCR\u2014played a dominant role, contributing nearly two-thirds of total demand. Together, they also recorded a strong 23% quarter-on-quarter growth.<\/p>\n\n\n\n

This sustained demand reflects business expansion and improving occupier confidence despite global uncertainties.<\/p>\n\n\n\n

Supply Declines, Tightening Market Conditions<\/strong><\/h2>\n\n\n\n

Office supply dropped significantly during the quarter. Total supply stood at 10.5 million sq ft, marking a 38% decline from the previous quarter and a 5% drop compared to the same period last year.<\/p>\n\n\n\n

Bengaluru and Hyderabad dominated new completions, contributing around 65% of the total supply. However, the overall reduction in new supply led to tighter market conditions and a marginal decline in vacancy levels.<\/p>\n\n\n\n

Vacancy Softens as Supply Remains Limited<\/strong><\/h2>\n\n\n\n

The limited addition of new office spaces led to a slight improvement in vacancy levels across India. Vacancy declined by 50 basis points to reach 17.2% in Q1 CY\u201924.<\/p>\n\n\n\n

This indicates a gradual absorption of available stock, supported by steady leasing activity across key markets.<\/p>\n\n\n\n

Rentals Continue to Rise Across Major Markets<\/strong><\/h2>\n\n\n\n

Rental values continued their upward trajectory during the quarter. On a pan-India basis, rentals increased by 8.7% quarter-on-quarter and are now inching closer to the \u20b9100 per sq ft mark.<\/p>\n\n\n\n

At the same time, the gap between market rent and in-place rent widened to around 14%. This widening spread reflects strong landlord pricing power. Cities such as Bengaluru, Pune, and Hyderabad witnessed noticeable rental growth, further reinforcing this trend.<\/p>\n\n\n\n

Sectoral Demand Remains Diverse<\/strong><\/h2>\n\n\n\n

Leasing activity remained driven by a mix of sectors, with IT\/ITeS continuing to lead the market. The sector contributed 28% of total demand, supported by a gradual return-to-office trend. Meanwhile, the BFSI sector strengthened its position, increasing its share to 20% in Q1 CY\u201924.<\/p>\n\n\n\n

Mumbai and Chennai together accounted for nearly half of BFSI demand. In the IT\/ITeS segment, Bengaluru led with a 35% share, while Noida emerged strongly with a 20% contribution, overtaking Hyderabad during the quarter.<\/p>\n\n\n\n

Large Deals Drive Leasing Activity<\/strong><\/h2>\n\n\n\n

One of the most notable trends in Q1 CY\u201924 was the dominance of large-sized transactions. A significant portion of leasing activity came from occupiers taking up large office spaces, highlighting confidence in long-term expansion.<\/p>\n\n\n\n