The banking, financial services and insurance (BFSI) and flex spaces emerged as main driving sectors for office spaces in India, accounting for 39% of the pan-India absorption in Q3 FY24 as compared to 20% in the previous quarter, according to data shared by Vestian – an occupier focussed workplace solutions firm.
In contrast, the contribution of IT-ITes sector has declined by 15% from Q2 FY24 to the third quarter of the same fiscal year, the report said.
The July-September quarter has recorded the highest absorption rate in 2024, totalling 18.61 million square feet amid heightened geopolitical tensions in the Middle East. It added that an increase of absorption rate could be attributed to India’s robust GDP growth .
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Following the same trend, new completions also surged by 3% over the previous quarter, reaching 12.80 mn sq ft in Q3 2024. However, construction activities have reduced by 4% compared to the corresponding quarter of last year.
The report stated that pan-India vacancy was reduced by 90 bps over the previous quarter amid robust absorption and healthy supply, reaching 14.8% in Q3 2024.
Southern Cities Dominate Office Space Absorption
The Vestian data revealed that Southern cities like Bengaluru, Chennai and Hyderabad accounted for 61% of the pan-India absorption in Q3 2024, a slight increase from 55% in the second quarter. It could be attributed to a significant rise in leasing activities across the major micro-markets of Bengaluru.
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If we specifically talk about Bengaluru, the city's absorption rose significantly from 25% in Q2 2024 to 36% in Q3 2024. On the other hand, the share of Mumbai reduced from 20% to 12% during the same period.
Besides Bengaluru, new completions reduced by 73% in Mumbai whereas Chennai registered a decrease of 29% over the previous quarter. And, Hyderabad reported the highest new completions of 4.10 mn sq ft in the past four quarters whereas construction activities remained muted in Kolkata during the same period.
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