Bengaluru Leads Office Leasing, Trails in Housing Sales in Q1 2024: Knight Frank Report
In the first quarter of 2024, Bengaluru emerged as the frontrunner in office leasing across India, as reported by Knight Frank India. However, the city experienced a year-on-year decline in residential sales for the same period, primarily due to a significant drop in affordable housing segment sales, which fell by over 60%.
While Knight Frank does not view this decline as alarming, it attributes the trailing figures to higher property prices. Bengaluru witnessed a 9% year-on-year growth in average residential real estate prices during the first quarter, ranking second only to Hyderabad, which saw a 13% increase. Notably, Bengaluru experienced the highest price growth compared to the preceding quarter.
Overall, residential sales in the top eight markets surged by 9% year-on-year, with Mumbai leading the rally by selling 23,743 units during the period. Homes priced above Rs 1 crore contributed significantly to this growth, with a 51% year-on-year increase in sales.
In the office segment, leasing transactions were driven by India-facing businesses and global capability centers, with a total uptake of 5.9 million square feet (msf) and 5 msf, respectively. Flexible office spaces also maintained momentum, constituting 23% of total transactions.
The report highlighted a shift towards conventional office setups, with many companies reverting to traditional work environments and reducing work-from-home policies, thereby boosting demand for office spaces.
During Q1 2024, the office market witnessed robust growth, with 13 msf of completions, marking a substantial 185% increase year-on-year. Vacancy levels decreased to 15.8% from the previous year's 16.4%.
Bengaluru and Hyderabad dominated the overall GCC transactions, while Chennai led in office rental growth with a 9% year-on-year increase. Mumbai recorded the highest office rental at Rs 115.1 per square feet per month, followed by the National Capital Region at Rs 86.8/sq ft/month.
Hyderabad emerged as a standout performer, experiencing a remarkable 261% year-on-year surge in office space transactions, closely followed by Pune with a notable 146% annual growth.
While Bengaluru shines in office leasing, the city faces challenges in residential sales due to escalating property prices, reflecting the dynamic nature of the real estate market in India's tech capital.
Cover image source- goodworks.in
