India saw 15 per cent rise in office real estate transactions in 2023: Report

New Delhi [India], January 3 : Transactions in the office space trended up to an annual tally within striking distance of an all-time high in 2023. Real estate consultant Knight Frank India, in their latest report 'India Real Estate: Residential and Office (July-December 2023)' released on Wednesday, said a total of 59.6 million square feet (million square feet) were transacted across the leading eight markets in the country, with a 15 per cent year-on-year growth.

According to the Knight Frank India report, office leasing volumes were marginally lower than the highest ever of 60.6 million square feet achieved in 2019.

The performance of the office market is reflective of the strong occupier activity emphasising on the inherent economic strength of the country and strong annual growth amongst the large economies of the world, the real estate consultant said.

While Bengaluru remained the largest market by volume leasing over 12 mn sq ft in 2023, Chennai (10.8 mn sq ft) and National Capital Region (10.1 mn sq ft) finished off the top three positions.

Chennai also recorded the strongest year-on-year growth of 92 per cent. Bengaluru saw a 14 per cent decline in leasing volumes on a yearly basis.

The office market witnessed 42.9 mn sq ft of office space completions in 2023.

Rents firmed up across all markets over the course of the year encouraged by demand and a relatively contained supply.

The Knight Frank report also said that 3,29,097 residential units were sold across the top eight markets of India in 2023 registering a growth of 5 per cent year-on-year.

New home launches also witnessed a rise of 7 per cent year-on-year in 2023 with the addition of 350,746 units in 2023.

Mumbai remained the leader in residential sales in 2023 with sales of 86,871 units, followed by the National Capital Region (NCR) with 60,002 units and Bengaluru with 54,046 units.

These three cities together constituted 61 per cent of the total residential sales during the year.

"The impetus behind India's recent dominance in office absorption is attributed to its strong economic fundamentals. The forthcoming year is poised for steady expansion, and 2024 promises to be a standout year for the office market, driven by India-facing businesses and GCCs. India will continue to play up on its natural advantages which include excellent real estate, highly competitive rents, very strong talent pool and a consistently growing economy, making it a robust end-user market," said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

"These factors will catalyse for advancing further demand for office space. The
surge in flexible workspaces will play a pivotal role in fostering growth-oriented businesses in India. With these factors in play, we anticipate the office market to reach new peaks in 2024," Baijal said.

Gera Developments, a developer mainly focussed in Pune, too, today released the bi-annual report. The average prices of homes for sale reached a new high of Rs 5,938 per sq ft, about 17 per cent higher than the previous peak of Rs 5,096 in December 2015. Between December 2022 and December 2023, home prices rose by 8.74 per cent, where the average rates were at Rs 5,461 per sq ft in December 2022, and went up to Rs 5,938 per sq ft in December 2023.

According to the report, all parameters during the second half of 2023 looked strong and stable. During this period, it contended that the rise in salaries and disposable income have more than compensated for the increase in interest rates.