Bengaluru, July 06, 2024: Knight Frank India in its latest report, India Real Estate: Residential and Office (January- June 2024) cited that Bengaluru registered office transaction volume of 8.4 mn sq ft in H1 2024. This is the highest transaction volume recorded amongst the leading eight cities in India. The city recorded a YoY growth of 21% which was largely attributed to establishment of GCCs by corporates looking to expand long-term operations in the market.
In H1 2024, GCCs and flex space occupiers dominated the leasing activity in Bengaluru accounting for 47% and 20% respectively of the total transactions in the city.
The increasing demand from occupiers and the availability of high-quality office space in Bengaluru have driven up rental prices in the market. In the first half of 2024, the average transacted rentals in Bengaluru rose by 7% YoY to NR 88.7/sq ft/month.
According to the report, Bengaluru’s residential market witnessed 4% YoY growth in the sales volume in H1 2024, recording 27,404 housing units in the year. Launches in the city recorded a growth of 9% YoY witnessing 25,567 units being launched in H1 2024 which when compared to same period last year was 23,542 units. The weighted average price of residential units in Bengaluru increased by 9% YoY to INR 6,163/ sq ft/ month.
Demand-supply economics
As one of the most preferred occupier markets among the top eight cities in the country, Bengaluru accounted for 24% of the overall demand in the first half of 2024. The city saw a leasing volume of 8.4 million square feet, reflecting a 21% increase compared to the same period the previous year. This growth is largely due to the establishment of Global Capability Centers (GCCs) by corporates aiming to expand their long-term operations in the market.
The city saw a significant influx of 7.7 mn sq ft of new supply in H1 2024 witnessing a growth of 21% YoY.
In the first half of 2024, flexible workspace tenants and Global Capability Centers (GCCs) emerged as the primary occupants of office spaces in Bengaluru. Leasing activity by GCCs reached 4 mn sq ft, doubling from 2 mn sq ft in the first half of 2023. Flexible workspace occupiers accounted for 1.6 mn sq ft, comprising 19% of the total transaction volume.
In H1 2024, the overall leasing volume by third-party IT services increased to 1.3 mn sq ft, reflecting a 32% growth from the previous year’s 1 mn sq ft. This resurgence highlights the ongoing significance of the IT sector in Bengaluru’s commercial real estate market.
Global Capability Centers (GCCs) accounted for 47% of the office space leasing volume in Bengaluru in H1 2024, up from 29% share in overall leasing in the same period in 2023. Major companies such as Google, Qualcomm, ANSR, Tekion, and Samsung expanded their operations in Bengaluru, underscoring the city’s appeal for GCCs due to its robust technology platforms and diverse talent pool.
Shantanu Mazumder, Executive Director, Bengaluru, Knight Frank India said, “Market dynamics have shifted with GCCs and flexible workspaces playing significant roles, reaffirming Bengaluru as a prime destination for commercial real estate. This is bolstered by the city’s infrastructure developments and strategic importance for global businesses. The increase in office volume transactions is largely driven by the establishment of GCCs by corporations seeking to expand their long-term operations in the market. Flexible workspaces continue to be crucial, offering flexibility and cost savings for sectors like third-party IT services and startups. Ongoing investments in infrastructure, along with Bengaluru’s strong reputation as a startup capital and hub for technology and innovation, are expected to drive long-term demand for office spaces.”
The Bengaluru residential market maintained its strong growth in the first half of 2024, with sales volumes reaching 27,404 units, a 4% increase compared to the same period in 2023. This marks the highest sales volume recorded for the first half of the year since the COVID-19 pandemic, highlighting sustained demand momentum. Prominent developers have been able to sell units quickly, often within a week of launch, reflecting strong buyer confidence and a robust appetite for home ownership in the city. Bengaluru witnessed a surge of 9% YoY in numbers of residential units being launched in H1 2024 which was recorded at 25,567 unites which when compared to H1 2023 was 23,542 units.
