Representative image of an office space
Credit: iStock Photo
Bengaluru: Bengaluru led the growth in office leasing across the country in the first quarter of calendar year 2024. However, it was the only major city in India to see a year-on-year fall in residential sales for the January-March 2024 period, according to a new report released by property consultancy Knight Frank India on Thursday.
Driven by a steep decline of over 60% in the affordable housing segment, home sales in Bengaluru fell 2% year-on-year to 13,133 units in the first quarter of the ongoing calendar.
While Knight Frank does not see this as an alarming factor yet, it blamed higher property prices for the trailing figures. Average residential real estate prices in Bengaluru grew 9% year-on-year during the first quarter, only second to Hyderabad at 13%. When compared to October-December 2023 period, prices saw the highest growth in Bengaluru at 4%.
Overall, residential sales surged 9% year-on-year to 86,345 units across the top eight markets during the first quarter of 2024. Mumbai led this rally with a total of 23,743 units sold during the period, while homes priced above Rs 1 crore made the highest contribution to the overall pie at 40%.
“Sales in this segment (premium) have grown by 51% year-on-year and it has been the primary driver for overall sales growth during the quarter,” the report noted.
In the office segment across eight markets, leasing transactions were primarily driven by India-facing businesses and global capability centres, recording 5.9 million square feet (msf) and 5 msf of space take up, respectively. Flexible office spaces also maintained momentum accounting for 3.8 msf of leasing or 23% of the total transactions in the segment during the period.
“Additionally, many companies are now reverting to conventional office setups, either reducing or discontinuing their work-from-home policies, further boosting demand,” Shishir Baijal, Chairman and Managing Director, Knight Frank India, said.
The office market saw 13 msf of completions in Q1 2024, marking a very robust 185% growth year-on-year. Vacancy levels during the period fell to 15.8% , from 16.4% in the same period the year before.
Notably, Bengaluru and Hyderabad accounted for 75% of the overall GCC transactions during the first quarter, while Chennai led office rental growth with a 9% year-on-year increase. Meanwhile, Mumbai recorded the highest office rental at Rs 115.1 per square feet per month followed by the National Capital Region at 86.8/sq ft/month in Q1 2024.
Hyderabad emerged as a standout performer, witnessing a staggering 261% year-on-year surge in office space transactions, closely trailed by Pune with a notable 146% annual growth.