India, New Zealand, and Singapore saw annual leasing growth of over 30% in Q3 2024. Demand across the top 11 countries in the APAC region rose by 10.7% YoY, reaching 2.2 million sqm (23.7 million sq ft) in Q3 2024. India continued to lead APAC office market activity, driving over 70% of the total demand during Q3 2024. The Asia Pacific office market is predicted to grow in 2025, with new Colliers’ data showing demand across top markets surging 10.7% year-on-year (y-o-y) in the third quarter of 2024.
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India continues to exhibit strong economic growth prospects and business optimism is reflected in the increasing number of Initial Public Offerings (IPOs) in recent years. The traction in the number and volume of public issues lends credibility to an environment of higher corporate earnings, rising participation by retail and institutional investors, and availability of adequate liquidity in the market. With 123 fresh issues (As of 20th October 2024) across multiple sectors, 2024 has already surpassed the total number of IPOs witnessed in 2023.
In the post-pandemic era, demand recovery in the office market has been swift, following a steep ‘V-shaped’ recovery trajectory. After subdued demand in 2020 & 2021, leasing activity had fully bounced back by 2022. In fact, since 2022, each year has been witnessing new all-time-high Grade A office space uptake at India level. With strong, consistent demand, average rentals have also surpassed the pre-pandemic levels (2019) across all the six major office markets for the first time in 2024. The rental recovery in the Indian office market, albeit relatively slower than the demand recovery trajectory has finally been fully complete, thus forming an elongated ‘U-shaped’ pattern.
As the education sector evolves, factors such as technology permeation, revamped building designs, and focus on health & safety are likely to define education real estate. Besides, modern educational building design must prioritise flexibility so that spaces can be reconfigured to adapt to various teaching methods and activities, developing a dynamic learning environment. To address this and move away from traditional classroom setups, educational buildings now include collaborative spaces to encourage teamwork and group learning. Moreover, sustainable, and eco-friendly design elements, such as energy-efficient systems and natural lighting, are becoming increasingly common to reduce the environmental impact of educational buildings.
The western cities of Ahmedabad and Mumbai, along with the southern tech hub of Bengaluru, all experienced healthy price appreciation in the 15-21% range whereas Chennai in south and Kolkata in east saw robust growth of 22% compared to the previous year, indicating strong economic activity and housing demand in these metros. This trend points to sustained demand in these economically vital centers. Pune, often seen as a more affordable alternative to Mumbai, also saw an 18% increase, suggesting it’s maintaining its appeal for homebuyers while still seeing significant price growth.
Residential assets were the first preference for domestic investors during Q3 2024 whereas foreign investors accounted for 64% of the commercial deals. Growing prominence of work-from-office mandates and GCCs (global capability centres) lured foreign investors, leading to an increase in the share of commercial investments from 24% in Q3 2023 to 71% in Q3 2024. On the other hand, the share of residential sector reduced to 19% in Q3 2024 from 44% in the same period a year earlier. However, investment in residential assets is expected to grow in the coming quarters as niche asset classes such as co-living, senior housing, and serviced apartments are gaining traction.
The surge in demand for luxury housing has been primarily attributable to a growing preference among affluent buyers for enhanced amenities and more spacious living areas that complement their multifaceted lifestyles. Moreover, the increasing aspirational class has significantly contributed to the increased demand for luxury properties. Furthermore, the rise in NRI and astute domestic investors in the Indian real estate market has considerably fueled the heightened demand for luxury residences.
During the first nine months of 2024, large deals (>200,000 sq ft) accounted for about 40% of the overall demand. Although a vast majority of these larger deals came from 3PL players, Engineering and FMCG segments also saw considerable large-sized deals. At the city level, industrial and warehousing space uptake in Delhi NCR was also driven by large sized deals, a marked deviation from 2023, wherein leasing activity was dominated by small sized deals. Almost 50% of the deals in the first nine months of 2024 were large sized in Delhi NCR.
In a report ‘India Market Monitor Q3 2024 – Investments’, CBRE indicates a robust 46% Y-o-Y growth in real estate equity investments, totalling USD 8.9 billion in Jan-Sep ’24 —the highest-ever recorded since CY 2018, surpassing the USD 7.4 billion total equity investments for CY 2023. On a quarterly basis, equity investments in real estate stood at USD 2.6 bn in the Jul-Sep’24 period. Domestic investors (predominately developers) took the lead with ~79% share in equity capital inflows in Jul-Sep ‘24. Singapore-based investors accounted for nearly 73% of the total foreign capital inflows, followed by the United States (~22%). Developer activity picked pace in Jul- Sep ’24 quarter, accounting for a share of nearly 47% in total equity investments, followed by institutional & collective vehicle investors (~36%).
Office leasing is likely to record a historic high of ~70 mn. sq. ft in CY 2024 across top 9 cities in India as per current estimates, says ‘CBRE India Office Figures Q3 2024’. The last highest office leasing was recorded in CY 2019 at 66.6 mn. sq. ft. The office demand will be driven by both global and domestic occupiers, who are expected to continue expanding their operations and consolidating their facilities to strengthen their market presence. GCCs are poised to expand significantly in India, accounting for about 35-40% of the total office leasing.