BFSI, flex spaces key demand drivers for office spaces in India: Report

New Delhi, Nov 19 (IANS) The banking, financial services and insurance (BFSI) and Flex Spaces emerged as key demand drivers for office spaces in India in the July-September period, accounting for 39 per cent of the pan-India absorption and an increase of 20 per cent from the previous quarter, according to a report on Tuesday.

Conversely, the share of IT-ITeS sector declined from 38 per cent in Q2 2024 to 23 per cent in Q3. This demand shift may alter the demand-supply dynamics across the country, according to the report by Vestian, an occupier-focused workplace solutions firm.

The July-September period recorded the highest quarterly absorption rate in 2024, totalling 18.61 million square feet amid heightened geopolitical tensions in the Middle East.

Moreover, an increase of 17 per cent over the previous year and 9 per cent compared to the last quarter in absorption could be attributed to India’s robust GDP growth compared to other major economies of the world which lured several large MNCs to lease new office spaces or expand, said the report.

Amid robust absorption and healthy supply, pan-India vacancy was reduced by 90 bps over the previous quarter, reaching 14.8 per cent in Q3. Despite a reduction in vacancies across the top cities, average rentals remained range-bound over the previous quarter.

Bengaluru, Chennai and Hyderabad accounted for 61 per cent of the pan-India absorption in Q3 2024. The share has also increased from 55 per cent in Q2 2024 which could be attributed to a significant increase in leasing activities across the major micro-markets of Bengaluru.

Bengaluru’s share in absorption rose significantly from 25 per cent in Q2 2024 to 36 per cent in Q3 2024. On the other hand, the share of Mumbai reduced from 20 per cent to 12 per cent during the same period.

All the cities except Mumbai and Chennai reported an uptick in construction activities during Q3. Hyderabad reported the highest new completions of 4.10 million square feet in the past four quarters whereas construction activities remained muted in Kolkata during the same period.