Bengaluru, Chennai and Hyderabad fuelling office market property recovery: JLL

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Much of the new office space that would be needed in the country by the end of next year would be triggered by the metros in the south of the Vidnhyas such as Chennai, Bengaluru and Hyderabad, data from real estate management firm JLL have projected. Of the total amount of space required for new offices, demand for as much as 60% would be generated in these three cities.

A corroboration of the heavy tilt towards the metros from the south is available from the data generated in the first quarter of 2024, when a demand of 30 million sq ft of new office was witnessed. The tech and startup capital of the country, Bengalurur, alone accounted for about 44% of this demand, The Economic Times has mentioned in a report quoting Jones Lang LaSalle (India). The report said between themselves three metros account for more than 66% of the active request for proposals for about 30 million sq ft at the pan-India level for the January March quarter of this year.

Robust demand

“Office demand for the three prime south India markets of Bengaluru, Hyderabad and Chennai have been quite robust and moving from strength to strength. The tech sector is strong in these cities, and the global capability centres (GCCs) have been driving office leasing activities significantly, particularly in Bengaluru and Hyderabad. The es significantly, particularly in share of south cities is poised to maintain a slightly higher share in the coming two years,” Samantak Das, chief economist and head of research and REIS, India, JLL told the newspaper.

Experts have said that this year is witnessing a revival of demand for large spaces from big companies such as QuessCorp, Morgan Stanley, Google and Amazon.

“If 2023 was a steady recovery, 2024 is a surge with big deals and RFPs. The office market is indeed bouncing back, with the leader in the pack being Bengaluru and the southern cities, and MMR and Pune in India is now definitely the ‘office of the world’ not more the back or front office,” said Juggy Marwaha, CEO (office) Prestige Group.

Covid impact

Demand was muted in the past two years, thanks to the pandemic that forced people indoors and many employees into work-from-home or hybrid work mode. With that constraint now gone and almost all companies switching to normal life, demand for new office space is rising in the country.

In a note about the office space market, JLL had said that the bulk of the demand was generated from Bengaluru, Chennai and Hyderabad for 2023 too. Bengaluru had the biggest share in the net absorption for 2023 but the growth curve (y-o-y) was steady. Chennai had a record year which surpassed all previous demands.

Hyderabad and Bengaluru accounted for 56.9% of all the new project completions in 2023. While new completions were recorded at 53.64 mn sq ft, Hyderabad had a share of 28.7% share, while Bengaluru had 28.2%. Chennai had 11.2% of the pie compared to 10.3% by Delhi-NCR.