Indian Office Space Sector Sees Revival Surpasses Pre COVID Levels in 2023 CREDAI Report

In CY 2023, the annual demand for Grade A office space in India exceeded 62 million square feet, surpassing the average leasing of 54 MSF recorded in CY 2018 and 2019

The Indian office space sector has witnessed a remarkable resurgence, with Grade A office space leasing surpassing pre-COVID levels in 2023, according to a report jointly issued by CREDAI in collaboration with CRE Matrix. The report highlights the robust revival of the Indian commercial real estate market, showcasing a significant increase in demand and a surge in lease terms.

In CY 2023, the annual demand for Grade A office space in India exceeded 62 million square feet, surpassing the average leasing of 54 MSF recorded in CY 2018 and 2019. This achievement underscores the resilience and revival of the Indian office space sector, indicating a strong rebound from the challenges posed by the COVID-19 pandemic.

The report further reveals that 2023 witnessed the longest weighted average lease term of 62 months, the highest ever recorded in the segment. This trend signifies a growing confidence among occupiers and multinational corporations (MNCs) in India’s economic growth trajectory, leading them to commit to longer lease durations.

Moreover, the average leasing period, which peaked at 59 months in CY 2018 and CY 2022, underscores India’s commercial segment prowess and the availability of Grade A/A+ office spaces that are highly sought after by international companies and global capability centres (GCCs).

Among the cities, Pune and Chennai experienced the highest growth in demand in CY 2023, with a 25% and 14% increase respectively compared to CY 2022. This surge was primarily driven by demand from the Banking, Financial Services, and Insurance (BFSI) sectors, with large pre-commitments observed in these cities. Additionally, Grade A/A+ rentals witnessed a significant increase of 14.5% in Q4 CY 2023 compared to the same quarter the previous year, with Noida, Chennai, and Hyderabad contributing significantly to this rental growth.

Commenting on the report findings, CREDAI President Boman Irani expressed optimism about the future of the Indian office space sector. He stated, “The Indian office space sector achieved new records in 2023, with increased leasing volumes and durations. India’s healthy macro-economic indicators continue to attract international organisations and investors, leading to significant investments in our country.” Irani also projected further growth in both supply and demand for office spaces, expanding beyond Tier I cities to Tier II and III regions.

The report’s findings indicate a promising outlook for the Indian commercial real estate market, reflecting confidence in India’s economic resilience and growth potential. As the sector continues to evolve and expand, it is poised to play a crucial role in driving economic development and attracting global investments to the country.

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