<p>The first half of fiscal year 2024 saw little movement in the demand for commercial office space in the top 7 cities; both net absorption and new completions were almost unchanged from the same time the previous year. said Anarock in their most recent evaluation.</p>
<p><img decoding=”async” class=”alignnone wp-image-298077″ src=”https://www.theindiaprint.com/wp-content/uploads/2023/12/theindiaprint.com-chennai-has-the-highest-growth-among-the-top-seven-cities-where-office-rental-has–750×420.jpg” alt=”theindiaprint.com chennai has the highest growth among the top seven cities where office rental has” width=”1170″ height=”655″ title=”Chennai has the highest growth among the top seven cities where office rental has increased by 7%. 6″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2023/12/theindiaprint.com-chennai-has-the-highest-growth-among-the-top-seven-cities-where-office-rental-has–750×420.jpg 750w, https://www.theindiaprint.com/wp-content/uploads/2023/12/theindiaprint.com-chennai-has-the-highest-growth-among-the-top-seven-cities-where-office-rental-has–768×430.jpg 768w, https://www.theindiaprint.com/wp-content/uploads/2023/12/theindiaprint.com-chennai-has-the-highest-growth-among-the-top-seven-cities-where-office-rental-has–150×84.jpg 150w, https://www.theindiaprint.com/wp-content/uploads/2023/12/theindiaprint.com-chennai-has-the-highest-growth-among-the-top-seven-cities-where-office-rental-has-.jpg 770w” sizes=”(max-width: 1170px) 100vw, 1170px” /></p>
<p>The top 7 cities’ new office supply increased by a pitiful 5% in H1 FY2024 compared to H1 FY23, but net office absorption marginally decreased annually throughout this time.</p>
<p>Interestingly, Chennai saw the largest annual 10% increase in average monthly office rental values, going from Rs 62 per sq. H1 FY2024 to about in feet. Rs 68 per square foot. ft. in H1 FY2023. Hyderabad followed with an annual growth rate of 8%. In the city, the average monthly rent for an office space increased from Rs 61 per sq. H1 FY2023 to approximately in feet. Rs. 66 per square foot. ft. in H1 FY 2024.</p>
<p>Office rental values increased by 7% annually in Bengaluru, Pune, and Kolkata during this time, while MMR and NCR witnessed increases of 5% apiece.</p>
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<p>According to Thakur, “it was widely anticipated that India’s demand for commercial office space would see a downturn amid shrinking business volumes and layoffs by several large corporates worldwide.”</p>
<p>Nevertheless, in contrast to the same time in FY 2023, office activity in the first half of FY 2024 was mostly steady despite these obstacles. New completions saw a meagre 5% yearly jump in the period and net absorption dropped by just 1%.”</p>
<p>IT/ITeS continues to lead leasing transactions in terms of sector-wise net absorption in H1 FY2024. However, the sector’s total proportion in leasing has been on a slide year-on-year. The IT/ITeS sector’s percentage of overall leasing was 46% in H1 FY2020, but it fell to just 29% in H1 FY2024.</p>
<p>The proportion of coworking spaces has increased as a result, going from 11% in H1 FY2020 to 24% in H1FY2024. This indicates a change in the leasing trend among corporates of all sizes, as flexible workspaces are increasingly seen as a practical and more affordable choice.</p>
<p>Rates of Vacancy</p>
<p>The majority of the top cities saw a slight increase in vacancy rates amid rising office space completions, with the exception of Kolkata, NCR, and MMR. Between H1 FY23 and H1 FY24, the average vacancy rate of Grade-A offices in the top 7 cities rose by 0.95%, from 15.9% to 16.85%.</p>
<p>Pune now has the lowest average vacancy rate (8.3%) among the top 7 office markets, according to a review of yearly fluctuations in vacancy rates. The percentage of vacancies decreased year over year in NCR, MMR, and Kolkata, by 0.8%, 0.45%, and 0.1%, respectively. Over the course of the time, Chennai’s vacancy rates remained stable.</p>
<p>Over the course of the fiscal year, office space vacancy levels rose by 0.5%, 0.5%, and 2.6% in Pune, Bengaluru, and Hyderabad, respectively.</p>
<p>Prospects</p>
<p>Given that Grade A offices are still available for less than $1 per square foot, the demand for commercial office space in India is expected to stay strong in the medium to long term, albeit undoubtedly facing short-term hurdles in the present global economy. The second half of 2024 might see a return to market stability for offices.</p>
