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Bengaluru leads office leasing across top 8 cities in Q3 2024; records second highest housing sales at 14,604 units
Global capability centres drove office absorption with a 62% share during the quarter in Bengaluru; luxury homes grabbed the largest share of the housing market
Bengaluru contributed a 28% share in the 19 million feet of office space leased across the top eight cities of India during the July-September quarter of the ongoing calendar, according to a report by property consultancy Knight Frank India.
The IT city’s housing market recorded sales volume of 14,604 units during Q3 2024, an 11% rise compared to the same period in 2023, making it the second-highest in the country. The city also saw a 5% annual increase in the number of residential units being launched at 13,966 units in Q3 2024, up from 13,353 units in Q3 2023, the report noted.
Office absorption in the IT capital during the three-month period stood at 5.3 million square feet, up 158% annually compared to 2.1 million square feet in the corresponding period of 2023.
New office supply in the city during the quarter ended September was recorded at 2.5 mn sq ft. According to the report, Bengaluru witnessed the second highest rental value appreciation of 7% year-on-year, taking the aggregated rent to ₹90.3 per square feet each month.
The report highlighted that during the third quarter of 2024, global capability centers (GCCs) and India facing business emerged as the primary occupants of office spaces in Bengaluru. Leasing activity by GCCs reached 3.3 mn sq ft, witnessing annual growth of 383% in Q3 2024, compared to 0.7 mn sq ft in Q3 2023. They accounted for 62% of the overall office space leasing volume in Bengaluru during the quarter, up from a 33% share in the same period last year.
Meanwhile, India-facing businesses accounted for 0.9 mn sq ft, comprising 14% of the total transaction volume in the city. Flexible office space operators occupied 12% of the total office space leased in the city, witnessing a year-on-year growth of 42% from 0.44 mn sq ft in Q3 2023 to 0.6 mn sq ft in Q3 2024. The overall leasing volume by third-party IT services increased to 0.5 mn sq ft, reflecting a 72% growth from the previous year's 0.3 mn sq ft.
Also Read: Housing sales decline by 11% YoY across top seven cities in Q3 2024; Mumbai, Bengaluru lead supply
"The rise in office space transactions is primarily driven by corporations establishing GCCs to expand their long-term operations. Continued infrastructure investments, combined with Bengaluru's strong reputation as a startup hub and centre for technology and innovation, are expected to sustain long-term demand for office spaces,” said Shantanu Mazumder, Executive Director, Bengaluru, Knight Frank India.
Mazumder added that the market’s momentum is projected to continue, fuelled by the city’s expanding economic landscape and sustained buyer interest
Affordable and mid housing segments lose market share
Residential prices in the IT capital saw a 10% year-on-year increase during the period under review, marking the highest growth rate among the eight major Indian cities, with the weighted average price reaching ₹6,326 per sq ft. This price rise was largely driven by strong demand, particularly in the premium segment, the report noted.
Also Read: Housing sales up 5% at 87,000 units across top 8 cities in Jul-Sep with Mumbai topping the list
Interestingly, data cited in the report revealed that over 63% of the residential units sold in Bengaluru during the September quarter belonged to the luxury segment comprising homes priced at ₹1 crore and above.
Meanwhile the mid ( ₹50 lakh - 1 crore) and affordable housing (under ₹50 lakh) segments recorded a 35% and 48% year-on-year decline in their market shares, respectively.
