New office supply hits all-time high in 2024 across 7 major cities: Vestian

India’s office real estate market reached a record-high supply in 2024, according to a report by real estate consultancy Vestian. The report, The Connect-Q4 2024, revealed that construction activity surged by 7 per cent year-on-year, with total new supply reaching approximately 515 lakh square feet across seven major cities.

 

Among these cities, Hyderabad saw the highest influx of new office spaces, followed by Bengaluru. In contrast, office space absorption in Kolkata and the National Capital Region (NCR) experienced an annual decline, highlighting uneven demand across markets.

 

“The IT-ITeS sector continued to dominate leasing activities during 2024, with a 36 per cent share. The share has increased from 24 per cent a year earlier. While the IT industry is expected to lead in 2025 on the back of strong demand from global capability centres (GCCs), other segments such as banking, financial services, and insurance (BFSI) and flex spaces are also anticipated to gain traction,” said Shrinivas Rao, chief executive officer, Vestian.

 

The report underscored the challenges facing India’s office market in 2024, attributing them to global macroeconomic uncertainty, escalating geopolitical tensions, and persistent inflation. Despite these headwinds, demand for grade-A office spaces surged, keeping developers actively engaged throughout the year.

 

Vacancy rates saw a slight improvement in 2024, dipping from 13.98 per cent in 2023 to 13.91 per cent, driven by strong absorption and steady supply. Meanwhile, rental prices in the top seven cities rose between 3.8 per cent and 8.2 per cent, reflecting sustained demand.

 

Moreover, office space absorption has continued its upward trajectory since the pandemic, defying global economic challenges. In 2024, absorption surged to an all-time high of 707 lakh square feet, marking a 16 per cent year-on-year increase. However, not all markets experienced growth. Kolkata and the National Capital Region (NCR) recorded annual declines of 36 per cent and 14 per cent, respectively.

 

Rao emphasised the growing focus on sustainability among occupiers, noting that several multinational companies with offices in India have committed to achieving net-zero emissions. This has fuelled a rising demand for green-certified office spaces across the country. In response, developers are prioritising the construction of sustainable office buildings to align with this shift in corporate priorities.