According to ICRA, the net absorption of office leasing across India's top six cities is projected to experience a year-on-year decline of 10% in the fiscal year 2024 (FY24). This decline, coupled with a substantial influx of new office space in FY24, is expected to lead to a slight increase in vacancy levels, rising by 60 basis points to reach 15.5% by the end of FY24. Nevertheless, office developers are anticipated to witness revenue growth ranging between 11% to 13% in FY24. This growth is likely to be supported by scheduled rent escalations and improvements in occupancy levels among well-established office players.

Projections indicate that rental rates are poised to rise by 3% to 5% year-on-year in FY24. This increase will primarily be driven by contracted escalations and lease renewals occurring at higher rates. ICRA's outlook for the commercial office sector is assessed as Stable. In FY23, the net absorption of office leasing reached approximately 57 million square feet, a level akin to FY20 figures, marking a notable recovery from the lower levels witnessed in FY21 and FY22 (22 million square feet and 33 million square feet, respectively). Physical occupancy rates have also shown promising growth, surging to around 65% as of June 2023 from a mere 25% in June 2022.