According to the latest report 'India Real Estate Q3 2023' from Knight Frank India, the top eight Indian markets have seen a substantial growth in office transactions, with a total of 16.1 million square feet (mn sq ft), marking a remarkable 17 percent year-on-year increase in Q3 2023. Furthermore, global corporations have reinforced their commitment to their Indian operations, with a significant portion of office transactions (44 percent) being attributed to the establishment and expansion of Global Capability Centres (GCC) in India.
Mumbai emerged as the most active office market, contributing to 20 percent of the total transactions during this period, with a total of 3.2 million sq ft in office space transactions.
Additionally, India's robust economy continues to drive growth in India accounting for 37 percent of office transactions, equivalent to 6 million sq ft in Q3 2023.
Average rent growth across markets during Q3 2023
During the third quarter of 2023, the rental market across various Indian cities displayed different trends in year-over-year (YoY) and quarter-over-quarter (QoQ) changes. Let's delve into the details for each market:
Kolkata experienced the highest YoY rental growth with a substantial 10 Percent increase. However, during the third quarter of 2023, there was no significant change in rents in Kolkata compared to the previous quarter.
Bengaluru also saw positive YoY growth, but at a slightly lower rate of 5 Percent. Quarter-over-quarter, rents increased by 2 Percent, indicating a relatively stable and growing rental market in the city.
Chennai and Mumbai had similar YoY growth rates, both experiencing a 3 Percent increase in rental prices. Additionally, both cities had a 2 Percent QoQ increase, suggesting steady growth in the rental market during the third quarter.
Pune, NCR (National Capital Region), and Ahmedabad all had a 2 Percent YoY increase in rental prices. However, there was no significant QoQ change in these cities, indicating that rents remained relatively stable during the third quarter of 2023.
Hyderabad, on the other hand, did not witness any YoY growth, with rental prices remaining flat. There was also no change in rents in Hyderabad from the previous quarter, suggesting a stable but stagnant rental market.
Global Capability Centers (GCCs)
During the quarter, Global Capability Centers (GCCs) accounted for 44 percent of the demand, a significant increase from the average of 21 percent seen since the first quarter of 2022. In Pune and Hyderabad, in particular, GCCs played a dominant role in occupier activity, representing 81 percent and 75 percent of the total area transacted, respectively. India-facing businesses remained a pivotal force in the market, contributing to 37 percent of the transacted area during the third quarter of 2023.