The Indian office property market has showcased remarkable resilience and growth in the first half of 2024, driven by a resurgence in economic activity and increased corporate occupancies. This impressive performance is highlighted by a record-high gross leasing of 33.5 million square feet from January to June, marking a significant 29% year-on-year (YoY) increase, according to data from JLL India. This achievement surpasses the previous record set in the first half of 2019, underscoring the market's robustness amid a favourable business environment.

The Role of Global Capability Centres (GCCs)

A critical driver of this growth has been the expansion of Global Capability Centres (GCCs), particularly those linked to technology, banking, financial services, and insurance sectors. These centres have fuelled the demand for office spaces through their high-end research and development activities. The increased presence and expansion of GCCs have not only boosted the leasing activity but have also positioned India as a pivotal player in global firms' real estate strategies.

Insights from Industry Leaders

Rahul Arora, Head of Office Leasing & Retail Services at JLL India, emphasized India's growing significance in the global real estate market, especially during times of economic uncertainty. He pointed out that GCCs are playing a crucial role in driving demand through their continuous expansions. Arora anticipates that the gross office leasing in India could reach an unprecedented 65-70 million sq. ft by the end of 2024, reflecting the sustained momentum in the market.

In the second quarter of 2024 alone, gross leasing surged by 21.3% sequentially to 18.38 million sq. ft, continuing a trend of strong quarterly performance. This consistent growth pattern indicates a robust and resilient market, poised to reach new heights.

Domestic Occupiers' Contribution

Samantak Das, Chief Economist and Head of Research at JLL India, noted the increasing certainty among global occupiers regarding their real estate plans, with India positioned prominently for expansion and growth. Additionally, domestic occupiers have shown robust momentum, accounting for 48.4% of India’s gross leasing activity in 2024, a significant rise from the average share of 35% observed from 2017 to 2019. This shift highlights the growing confidence and investment from domestic companies in India's office property market.

Major Cities Leading the Charge

Leasing activity has been widespread across India’s major cities, demonstrating the market's strength and potential. Cities like Bangalore, Mumbai, Delhi-NCR, Hyderabad, Pune, and Chennai have seen significant leasing activity, contributing to the overall growth. This broad-based demand across various cities underscores the diverse and dynamic nature of India's office property market.

Future Prospects and Challenges

Looking ahead, the Indian office property market is expected to maintain its growth trajectory, driven by continuous economic resurgence and the expansion of GCCs. The optimistic outlook is supported by the increasing demand for high-quality office spaces, both from global and domestic occupiers.

However, challenges such as global economic uncertainties, potential interest rate hikes, and geopolitical tensions could impact the market. Despite these challenges, the overall sentiment remains positive, with industry leaders confident in the market's ability to adapt and thrive.

Conclusion

In summary, the first half of 2024 has been a landmark period for the Indian office property market, with record-high gross leasing driven by economic resurgence and the expansion of Global Capability Centres. The significant contributions from both global and domestic occupiers highlight the market's resilience and potential for sustained growth. As we move forward, the market is poised to reach new heights, reflecting the robust and dynamic nature of India's office property sector.