Net absorption to dip 10% in FY24 for office leasing segment
Real Estate

Net absorption to dip 10% in FY24 for office leasing segment

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.

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.

Next Story
Technology

We’re building robots that flow, not just move

Founded in 2021, Flo Mobility is reimagining construction automation with vision-AI robots designed for seamless movement through complex sites. In conversation with CW, Manesh Jain, Founder & CEO, discusses the company’s origin, its LiDAR-free tech stack, and expansion plans in the Middle East and US.What inspired the name Flo Mobility? Why ‘Flo’ and not ‘Flow’?When we started the company in 2021, our focus was on building autonomous navigation systems for robots. Since our work centred around robot movement, ‘mobility’ naturally became part of the name. We wanted to co..

Next Story
Real Estate

We’re committed to setting benchmarks in sustainable luxury living

From a landmark land acquisition in Boisar to ambitious launches across the Mumbai Metropolitan Region (MMR), National Capital Region (NCR), Bengaluru and Pune, Birla Estates is driving future-ready growth with a strong focus on sustainability, partnerships and premium living, firmly anchored in its LifeDesigned® philosophy. K T Jithendran, Managing Director & CEO, outlines the company’s premium, sustainable growth playbook in conversation with PRATAP PADODE, Editor-in-Chief, CW. Excerpts:Birla Estates recently acquired a 70.92-acre land parcel in Boisar, Maharashtra, for..

Next Story
Infrastructure Urban

Mumbai’s land crunch and ageing homes call for structured renewal

Founded in 2022, Etonhurst Capital Partners is a real-estate fund management platform focused on the Indian market. As the firm achieves the first close of Rs 1.8 billion for its debut Rs 5 billion fund, Bamasish Paul, Co-founder, Managing Partner & CEO, discusses its sharp focus on redevelopment-driven value creation in Mumbai’s urban core with CW. Excerpts:Etonhurst Capital has achieved a significant milestone with the first close of Rs 1.8 billion for its Rs 5 billion fund. What factors contributed to this early success and how do you plan to attract further investments to r..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?