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
Equipment

Ammann India Inaugurates ABG Screed Assembly Station and ASRS

Ammann India, one of the leading concrete equipment players in India, has inaugurated its new ABG Screed Assembly Station and Automated Storage and Retrieval System (ASRS) at its advanced manufacturing facility. The event was graced by Hans-Christian Schneider, Group CEO of Ammann Group, alongside the leadership team led by Dheeraj Panda, Managing Director of Ammann India. The ABG Screed Assembly Station is set to enhance operational efficiency and ensure high-precision assembly, reinforcing Ammann’s commitment to delivering world-class paving solutions. This new station reflects the compa..

Next Story
Real Estate

How Rising Property Prices Are Shaping Real Estate Market

The global economy significantly influences real estate markets, with factors such as inflation, interest rates, and investment trends impacting property prices worldwide. Despite affordability concerns, demand remains robust, particularly in the mid-income and luxury segments. According to CREDAI reports, property prices in key metropolitan cities have increased by 10 to 11 per cent year-over-year. To address the strong demand for premium housing, developers are adopting innovative financing models and focusing on sustainable development. Foreign investments, regulatory reforms like RERA, an..

Next Story
Equipment

Caterpillar Powers Today and Drives Tomorrow at bauma 2025

Caterpillar Industrial Power Systems will showcase a range of optimised, fuel flexible engines, integrated advanced power technologies and services solutions at bauma Munich from April 7-13. The theme, “A journey to a lower-carbon future,” highlights Caterpillar’s ongoing commitment to sustainably powering a better world. The bauma Munich exhibit in Hall A4, stand 336, includes the award winning Cat® C13D and a new high power C3.6 delivering 106 kW (142 hp). The stand features the first showing of a series hybrid power expansion powertrain, part of a growing electrification ecosystem ..

Advertisement

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Advertisement

Talk to us?