Office Transactions Grows 5% YoY in Q1 2023: Knight Frank India

Transactions at 11.3 mn sq ft in Q1 2023 and completions at 4.6 mn sq ft

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In its recent report, India’s premier real estate consultancy, Knight Frank India observes that 11.3 million square feet (msf) of office space was transacted in January-March 2023 (January – March). Bengaluru remained the foremost market with a total leasing of 3.5 msf of office space, followed by NCR which recorded 2.6 msf and Mumbai at 2.2 msf of gross leasing in the first three months of the calendar year 2023. The three largest markets accounted for 73% of the area transacted and saw positive growth in YoY terms.

Bengaluru was the most active market during Q1 2023 and accounted for 31% of the total area transacted during the period. Information Technology dominated markets of Chennai, Hyderabad and Pune saw occupier activity decline in YoY terms during the quarter. New completion in Q1 2023 was recorded at 4.6 msf led by NCR that saw fresh supply of 2 msf followed by Bengaluru with 1.3 msf of new office spaces. Rents have grown across 8 key cities during Q1 2022. Kolkata saw the most growth with a YoY rise in rental values of 9% in Q1 2023, followed by Hyderabad, Bengaluru and Chennai by 5% YoY.


Demand for office space grew steadily in Q1 2023 despite concerns around the slowing global economic growth. 11.3 msf of office space was transacted during the quarter. Bengaluru maintained its top position leasing 3.5 msf of office space, marginally higher in year-on-year terms at 1%. NCR recorded a rise of 12% YoY and was second only to Bengaluru in terms of gross leasing volumes which reached 2.6 msf during the period.

Mumbai recorded an impressive 132% YoY growth with total leasing of 2.2 mn sq ft backed by big-ticket leases signed by flex space, BFSI, education and e-commerce occupiers. Kolkata registered a rise of 48% YoY with leasing of 0.2 msf recorded in Q1 2023. Hyderabad, Ahmedabad, Chennai, and Pune saw a decline in leasing by 46%, 20%, 18% and 8% respectively.

CityQ1 2023 Transactions

(Million Square Feet)

Q1 2023 Supply

(Million Square Feet)

 Q1 2022Q1 2023% Change YoYQ1 2022Q1 2023% Change YoY
ALL INDIA10.811.35%11.94.6-61%

Source: Knight Frank Research; A dash represents negligible activity in the market in the said period 


Flex spaces continued to find the occupier’s favor and constituted 29% of the transacted space during Q1 2023. Flex space operators were particularly active in Bengaluru as the city accounted for a substantial 50% of the total space transacted by the sector. The other service sector companies took up 30% of the space transacted during the period while the IT and BFSI sectors accounted for 16% each. The IT sector’s ‘back to office’ transition continues to be supported by the sector’s leadership teams, and progress in terms of increase in actual physical occupancy has been seen across markets. It is expected that the sector’s share in transactions will approach its long-term quarterly average of 35-40% share, once the return to office is complete.

 Information TechnologyCo-WorkingBFSIManufacturingOther Services Sector
Q1 202227%21%10%13%29%
Q1 202316%29%16%9%30%

Source: Knight Frank Research


While transaction volumes have grown, rental levels have also continued to stabilize or grow in YoY and sequential terms across all markets in Q1 2023. Even the Kolkata office market, where rents remained stable while other markets experienced significant growth over the past three quarters, saw the rental level spike by a substantial 9% YoY during the quarter. Rental levels in the larger office markets of Hyderabad, Bengaluru and Chennai grew by 5% YoY in Q1 2023.

Average rent growth across markets during Q1 2023

MarketYoY ChangeQoQ Change

Source: Knight Frank Research

Shishir Baijal, Chairman and Managing Director, Knight Frank India says, “The relatively stronger economic environment in India has helped the office market to step into 2023 on a positive note. The proposition of high-quality talent and the cost arbitrage with the appreciation in the USD has served to anchor the Indian businesses of multinational corporations. Flex spaces continue to gain ground and currently stand at a historic high demand share of 29% in Q1 2023. The premise for value-add offerings and flexibility has firmly entered the mainstream and swayed occupiers in their favour. The strong fundamentals of the Indian office market and gradually improving physical occupancy levels observed across the eight markets, are an encouraging sign for the year ahead”.


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