Business News | India's Office Space Absorption Soars to 34.8 Mn Sq.ft in H1 2024: Savills India

New Delhi [India], July 10 (ANI): Office space absorption in India's six major cities reached a record high of 34.8 million square feet in the first half (H1) of 2024, according to Savills India.

This represents 29 per cent increase compared to H1 2023.

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Meanwhile, new office space supply witnessed a sharp decline of 32 per cent year-over-year (YoY), with only 17.4 million square feet completed in H1 2024. This limited supply, coupled with increased transaction activity, led to a decrease in the overall vacancy rate.

By the end of June, the vacancy rate had dropped to 15.9 per cent, down from 18.0 per cent in the previous year.

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Naveen Nandwani, MD, Commercial Advisory and Transactions, Savills India said, "India's office market saw record-high absorption in the first half of 2024, indicating positive business sentiment among occupiers. The return of employees to physical offices has spurred office demand across all occupier segments, including tech."

He added, "The demand momentum is expected to continue through the second half, with the year anticipated to see new record absorption levels of 65-66 million square feet in 2024. We expect strong leasing activity from the tech, BFSI, flexible workspace, and manufacturing sectors."

Leasing activity in Q2 2024 reached 17.2 million square feet, reflecting a slight decrease of 2.0 per cent compared to the previous quarter.

However, new office space supply surged by 64 per cent quarter-on-quarter to 10.8 million square feet. Bengaluru maintained its position as the top contributor to national leasing activity in the first half of 2024, accounting for 28 per cent of the market.

Mumbai and Hyderabad followed closely behind with shares of 18 per cent and 16 per cent, respectively.

Mumbai's office market has shown a remarkable revival since the second half of 2023, with significant growth.

The technology sector led the leasing activity, taking up 39.3 per cent of the total space absorbed. The banking, financial services, and insurance (BFSI) sector followed at 16.9 per cent, and flexible workspaces captured 13.9 per cent.

Mumbai stands out as the only city to witness a YoY increase in new office space supply during the first half of 2024.

All other cities saw a decrease in new supply compared to the same period last year. Year-over-year (YoY), leasing by the tech sector grew significantly by 61 per cent, and the BFSI sector saw a 51 per cent increase.

However, the flexible workspace segment experienced a 16 per cent decline in space take-up. Large deals (over 100,000 square feet) remained dominant in overall leasing activity this quarter, contributing 43.5 per cent of all transactions.

Looking ahead, Savills India anticipates record-breaking absorption levels for the full year, reaching approximately 65-66 million square feet.

This would be the highest annual total ever recorded. However, new supply is expected to lag behind demand, potentially leading to intensified competition for high-quality office spaces.

In Mumbai, the financial services sector (BFSI) remained the dominant driver of demand, accounting for 35 per cent, followed by technology (tech) at 17 per cent. Smaller deals (

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