Bengaluru office rents to grow by up to 4.5% by year-end | Real Estate Asia
, India
412 views

Bengaluru office rents to grow by up to 4.5% by year-end

Supply is expected to reach 15 million sq ft this year.

Office supply in Bengaluru, India by end-2024 is expected to range between 14–15 million sq ft with a complementary net absorption of 10–11 million sq ft, according to a recent JLL report. Strong preference for the city among occupiers is likely to ensure demand-supply balance, making vacancy range-bound.

Quality supply inflow commanding higher-than-market-average rents and tight vacancy levels, particularly in prime markets, is likely to cause an overall rent growth of 4.0%–4.5% y-o-y.

Here’s more from JLL:

Quarterly gross leasing of 6.1 million sq ft in Q2 was the third highest ever for the city. Around 31% was contributed by IT occupiers, with Manufacturing/Industrial and BFSI sectors following, with respective shares of 29% and 26%.

Net absorption of 2.2 million sq ft in Q2 was up 26% q-o-q, adding up to a healthy demand of 3.9 million sq ft for H1 2024. Sustained demand across occupier sectors resulted in a higher net absorption, with the SBD contributing around 65%.

Supply regained momentum amid rising demand for quality space

Around 4.1 million sq ft was added in Q2, a 2.8-times growth q-o-q, compensating for the low supply last quarter. SBD and Electronic City submarkets each received 35%–40% of the Q2 supply. Estimated supply for 2024 stands at 14–15 million sq ft.

While demand was strong, the surge in supply pushed vacancy up by 60 bps q-o-q to 13.9%. Vacancy by end-2024 is likely to range within 14%–14.5% amid rising demand for Grade A space.

CBD and Whitefield submarkets record the highest q-o-q rent growth

Bengaluru’s overall office sector rents grew by a marginal 0.8% q-o-q, while on a y-o-y basis, rents were up by 3.4%. The CBD and Whitefield submarkets witnessed a 3%–3.5% q-o-q growth in rents.

Capital values recorded a q-o-q growth of 1.6%, higher than the quarterly average growth in 2023. On a y-o-y basis, the growth was 6.5%. Yields remained almost unchanged, with a minor 6 bps drop q-o-q.

 

Join Real Estate Asia community
Since you're here...

...there are many ways you can work with us to advertise your company and connect to your customers. Our team can help you dight and create an advertising campaign, in print and digital, on this website and in print magazine.

We can also organize a real life or digital event for you and find thought leader speakers as well as industry leaders, who could be your potential partners, to join the event. We also run some awards programmes which give you an opportunity to be recognized for your achievements during the year and you can join this as a participant or a sponsor.

Let us help you drive your business forward with a good partnership!