Bengaluru Tops Charts with 18.1 Mn Sq Ft Office Space Transactions in 2024

Bengaluru, January 07, 2025: Knight Frank India’s latest report, India Real Estate: Residential and Office (July – December 2024), highlights Bengaluru’s continued dominance in the Indian commercial office market. The city accounted for one-fourth of the overall office transaction volumes across the top eight cities in 2024, achieving the highest-ever annual absorption at 18.1 million sq ft, a 45% increase from 12.1 million sq ft in 2023. Bengaluru also recorded historic half-yearly office transaction volumes at 9.7 million sq ft in H2 2024, surpassing the previous best of 8.7 million sq ft during H2 2021. Global Capability Centres (GCCs) played a significant role in this growth, with their transacted volume increasing by 145% year-on-year from 3.8 million sq ft in 2023 to 9.3 million sq ft in 2024, constituting over 50% of the overall office transaction volume in the city. Weighted average rents rose to an all-time high of INR 91.8 per sq ft, reflecting a 6% appreciation from INR 86.4 per sq ft in 2023. Vacancy levels also saw a marked decline, reducing by 324 basis points from 15.1% in 2023 to 11.9% in 2024, further underscoring the robust health of Bengaluru’s commercial office market.

The residential market in Bengaluru also achieved a decadal high in 2024, with total sales reaching 55,363 units. New launches during the year were recorded at 56,014 units. While the INR 5-10 million price segment continued to be the largest contributor to overall sales with a 38% share, this segment’s base declined by 22%, from 26,836 units in 2023 to 21,000 units in 2024. On the other hand, sales in higher price segments witnessed substantial growth, with the INR 10-20 million category increasing by 45% year-on-year, the INR 20-50 million category by 91% year-on-year, the INR 50-100 million category by 58% year-on-year, and the INR 100-200 million category by 20% year-on-year. Notably, price segments of INR 10 million and above constituted 54% of the total residential sales, reflecting a clear shift toward higher-value transactions in the city’s residential market.

As one of the most preferred occupier markets among the top eight cities in the country, Bengaluru accounted for one-fourth of the overall office transaction volumes in the year 2024. In 2024, the Bengaluru office market achieved record-breaking performance in the Indian commercial real estate sector, witnessing its highest-ever annual and half-yearly transaction volumes. The city saw a leasing volume of 18.1 mn sq ft in 2024, reflecting an increase of 45% from 12.1 mn sq ft in 2023. The second half of 2024 saw an extraordinary 76% increase in transactions at 9.7 mn sq ft over the second half of 2023.

Business districts such as ORR, with its established tech parks, and PBD East, benefiting from metro connectivity and proximity to residential hubs, remained at the forefront of leasing activity by contributing to more than 60% of the overall transaction recorded in the market.

The city saw an influx of 12.4 mn sq ft of new office supply in 2024, majority of which was concentrated in PBD North with a share of 33% of overall supply, followed by PBD East and ORR which accounted for 28% of the total influx.

Shantanu Mazumder, Executive Director, Bengaluru, Knight Frank India said “Infrastructure enhancements have been instrumental in supporting the market’s performance. Key projects such as metro extensions and expressway developments, have improved connectivity across Bengaluru, further boosting the appeal of micro-markets like PBD East and PBD North. These regions have benefitted from large-scale investments in office parks and urbanization initiatives. The operational Purple Line metro and ongoing construction of the Silk Board-Hebbal metro corridor have made these locations more accessible, attracting significant occupier interest and investments.

Reduced vacancy levels and balance between supply and demand highlights the market’s capacity to accommodate growth. The city’s technological advancements and its reputation as a hub for innovation will continue to attract a steady influx of global tech companies and start-ups, further driving office space demand in 2025.”

GCCs leading occupier of the office space; Office absorption volumes expand in flex workspaces

GCCs continue to be the dominant occupier in the Bengaluru’s commercial market, attributing 52% of overall transaction in the city at 9.3 mn sq ft in 2024. These centers accounted for a significant portion of leasing activity as multinational corporations expanded their operations in Bengaluru, drawn by its established reputation as a technology hub and access to a highly skilled talent pool. Transactional volumes by GCCs increased significantly by 148% YoY in 2024, up from 3.8 mn sq ft in 2023. Notably, in 2024, Bengaluru market commanded a substantial share of 42% of all the GCC transactions, totaling 22.7 mn sq ft across leading eight cities in the country. Companies like Amazon, Bosch, and Walmart have reaffirmed the city’s status as a prime location for setting up innovation-driven and large-scale operational centers. This trend is anticipated to sustain long-term demand for Grade A office spaces, particularly in the Outer Ring Road (ORR) and Peripheral Business District (PBD) North & East, where the ecosystem of technology parks continues to flourish.

Flex spaces, second biggest occupier type by end use in Bengaluru’s commercial market, contributed to the highest share in overall flex space transaction amongst the top eight cities in the country, with an impressive share of 27%. Flex spaces saw an increase in absorption by 14% YoY, from 3.8 mn sq ft in 2023 to 4.3 mn sq ft in 2024. The flexible workspace is aligning with the evolving hybrid work culture adopted by many companies, highlighting the sector’s role in catering to businesses seeking operational flexibility and cost efficiency. This demand was particularly evident among start-ups and global firms adjusting to market uncertainties.

India facing businesses and Third-Party IT services transacted volumes of 2.6 mn sq ft and 1.9 mn sq ft in 2024.

SBD gains rental appreciation of 12% YOY, CBD & Off-CBD highest valued rental market at INR130-210/ sq ft/ month

Rental values continued to rise, with an average increase of 6% YoY to INR 91.8/ sq ft/month. This upward trajectory was particularly prominent in high-demand locations such as the Central Business District (CBD) and Off-CBD, where limited supply pushed rental values higher. Similarly, the ORR and PBD North & East experienced healthy rental growth, underpinned by sustained demand for quality spaces.

Bengaluru’s residential real estate market maintained its strong performance in H2 2024, driven by steady demand across diverse segments. Despite macroeconomic challenges, including rising interest rates and increased construction costs, the market showed remarkable resilience. The city achieved a decadal high in residential sales, with 55,362 units sold in 2024—a 2% YoY increase compared to 54,046 units sold during the same period the previous year. In H2 2024 alone, 27,958 units were sold. Bengaluru also saw a decade-high surge in new launches, with 56,014 units introduced, reflecting a 10% year-on-year growth and underscoring the robust influx of new projects in the market. South Bengaluru micro-market continued to dominate sales and launches in the city in 2024.

Demand expands for higher ticket size segments of residential units

Amongst all the eight cities in the country, Bengaluru leads the residential sales for the ticket size segment of INR 10-20 mn. With sales of 19,744 units within this price segment, contributing to 22% of the overall sales of 90,814 units across leading eight markets in the country. INR 10-20 mn is also a large market segment that has expanded its volume in the city by 45% YoY from 13,626 units in 2023. This segment now contributes 36% of the overall sales in the city.

The highest % growth in the Bengaluru residential market was observed in the ticket size segment of INR 20-50 mn, annual growth of 91% YoY to 9,584 units during 2024 from 5,014 units in 2023. The sales in higher ticket size segments of INR 50-100 mn grew by 58% YoY to 552 units, and INR 100-200 mn grew by 20% YoY to 89 units in 2024. About 5 units were sold in the ticket size segment of INR 200-500 mn.

INR 5-10 mn ticket size recorded sales of 21,000 units with a decline of 22% in its sales base of 26,836 units during 2023. The highest decline was observed in the INR 5 mn or below segment at 46% from 8,141 units in 2023 to 4,388 units in 2024.

Sustained demand from diverse buyer base accentuates value of residential assets

The market’s steady growth is further evidenced by the increase in weighted average residential prices, which have risen by 12% year-on-year to INR 6,620 INR/sq ft in 2024. This price appreciation reflects strong demand dynamics, particularly in the larger ticket size segments.

Shantanu Mazumder, Executive Director, Bengaluru, Knight Frank India, said, “Bengaluru’s residential real estate market in 2024 has demonstrated remarkable growth. The city’s strategic infrastructural developments, coupled with its dynamic economic profile, remain central to positive momentum in residential sales. As developers aligned supply with evolving buyer preferences, particularly for luxury and spacious homes, the market showcased its potential for sustained growth. With the continued expansion of the metro network and ongoing enhancements to road and airport connectivity, Bengaluru’s residential market continues to demonstrate its vibrancy and growth potential”.