In the third quarter of 2023, India’s primary Tier-1 cities experienced a notable 7% rise in the supply of commercial real estate, reaching a cumulative area of 14.61 million square feet.
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The commercial real estate supply in India’s leading Tier-1 cities saw a 7% increase during the third quarter of 2023, totalling 14.61 million square feet. This growth can be credited to government initiatives aimed at boosting the IT sector, such as tax incentives and infrastructure enhancements, which have stimulated demand for commercial space, according to a PropEquity study.
Hyderabad took the lead, securing around 35% of this new supply, with Bengaluru following closely at 25%. During the same quarter, there was a remarkable 20% upsurge in net occupancy, a significant leap from 10.30 million square feet (in Msft) in the previous quarter, Q2 CY’23, to 12.31 million square feet (in Msft) in Q3 CY’23. In contrast, gross occupancy saw a slight 2% increase in the third quarter of 2023 when compared to the previous quarter, Q2 2023.
This significant surge in occupancy serves as evidence of the market’s dynamic character and the increased demand for commercial real estate during that timeframe. It indicates that businesses and enterprises have been actively broadening their footprint and activities, highlighting the sector’s vitality and its potential for ongoing growth in the near term.
Among the Tier 1 cities, the Mumbai Metropolitan Region (MMR) stands at the forefront, where net occupancy surpasses the new supply, additionally marking a notable 9% year-on-year increase in new supply.
In contrast, the Delhi-NCR region has experienced a notable decrease in new supply over recent quarters, marked by a year-on-year decline of 65%. This decline can be primarily attributed to the surplus stock from previous quarters and elevated rental prices in the current quarter. As a result, Delhi NCR’s contribution to new supply among Tier-1 cities stands at 7%.
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