Bengaluru tops India office market leasing for Q4 and full year 2024

• Quarterly gross leasing volumes were the highest ever in Bengaluru, surpassing the previous record by 13%. On a q-o-q basis the GLV grew by ~61%, resulting in a record annual figure of ~22.0 million sq ft in 2024, 42% higher over 2023.
• Quarterly net absorption of 6.9 million sq ft was also a record high, driven by fresh leasing and healthy pre-commitments in Q4 completions. Annual net absorption for 2024 hit 14.7 million sq ft, again the highest ever.

Healthy quarterly supply with ~40% pre-commitment restricts rise in vacancy

• Quarterly completions of 4.4 million sq ft were up 41% q-o-q, with SBD submarket accounting for a 67%, while the remaining supply came up in Whitefield. The annual supply volume added up to around 13.0 million sq ft during 2024.
• Despite healthy supply during Q4, vacancy levels dropped by 140 bps q-o-q, driven by strong leasing momentum and ~40% pre-commitment levels in the new supply. Vacancy stood at 11.9% at end-2024, the lowest in the last nine quarters.

Overall city level rents increased to INR 93.6 per sq ft, per month, recording a q-o-q rise of 2.6%

• Office rents grew by 2.6% q-o-q and 5.6% y-o-y as prominent developers continued to offer spaces at much higher rents than the market average, particularly in prime submarkets witnessing tight vacancy levels and strong demand for space.
• Overall capital values rose 3.2% q-o-q in Q4, while on a y-o-y basis they were up by 7.6%. Capital value trends in the city are on a steady growth curve as investors continue to show interest in Bengaluru’s prime office assets.

Outlook: Demand to remain on par with the healthy supply inflow, resulting in sustained tight vacancy levels in the city

• Around 15-15.5 million sq ft of supply is expected during 2025. Net absorption is likely to touch 13.0-14.0 million sq ft by end-2025, as Bengaluru office market should continue to witness healthy demand from portfolio expansions and entry of new office occupiers.
• City rents are set to increase at an annual rate of 4.0-4.5% during 2025-2026. CBD rents are expected to rise the most (6-7%) y-o-y, followed by Whitefield. Bengaluru office market should continue as one of the most premium markets with high interest from investors.