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Amid global economic uncertainties, India’s commercial real estate sector is set to experience significant growth from 2023 to 2025. According to a recent CBRE report, a whopping 165 million sq. ft. of fresh office space will emerge by 2025, eclipsing the 142 million sq. ft. established in the prior three years. Property dealers say the market has remained unaffected despite concerns of global economic slowdown.
Despite a global trend of corporations reducing office footprints, India stands resilient with its vibrant leasing activities. In 2022, the country witnessed the absorption of 56.6 million sq ft, a robust 40% rise from the year before, and only second to the 2019 peak at 65 million sq ft.
Bengaluru and Hyderabad continue to be the frontrunners. They are expected to account for nearly half of the total new office spaces among India's top seven cities. Between 2023 and 2025, Bengaluru alone is projected to lead the charge by providing 29% of the total office space in the country. Close on its heels is Hyderabad with 20%. Delhi-NCR accounts for 17%, Pune with 12%, Chennai with 11%, Mumbai with 9%, and Kolkata makes up the remaining 2%.
The consistently buoyant activity in the Indian office space segment is underpinned by several factors. The average annual office supply swelled by 17%, with the average building size seeing an 18% surge from 2020 to 2022. Experts anticipate this momentum to gain even more speed, increasing by 15-18% in the 2023-2025 timeframe.
Another pivotal factor for this boom is the country's position as a tech powerhouse. Ongoing and heightened technology investments by global corporations reaffirm India's moniker as the 'office of the world'. The country's competitive advantage in cost and scale is anticipated to lure global corporations to establish more Global Capability Centres (GCCs) across various sectors.
Furthermore, a continuous supply of about 120 million sq. ft. of office space is projected over 2026-2027, underscoring the sustainable nature of this growth.
In conclusion, as global business dynamics shift, India's office real estate market is not only holding its ground but also setting a pace for remarkable expansion. This growth, steered by technology investments and the nation's cost and scale benefits, showcases India's resilience and foresight in the commercial property arena.
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