Bengaluru accounted for 21% of the total transactions across top eight markets in 2023
- Average transacted rentals in Bengaluru grew by 6.6% YoY
- 54,046 residential units sold in 2023
- Premium residential units costing >INR 10 mn witnessed an annual growth of 38%
Bengaluru, January 3, 2024: Knight Frank India in its latest report, India Real Estate: Residential and Office (July – December 2023) cited that Bengaluru registered office transaction volume of 12.5 mn sq ft in 2023. This is the highest transaction volume recorded amongst the leading eight cities in India.
In 2023, despite the moderation in comparison to 2022, Bengaluru registered the second-best office transactions surpassing the 10 – year average of 12.2 mn sq ft. Global Capability Centres (GCC), flex spaces and India facing occupiers, supported the office leasing momentum in Bengaluru while there was a moderation from the tech occupiers. During 2023, flex space occupiers and GCCs dominated the leasing activity in Bengaluru each accounting for 30% of the total transactions in the city.
The growing occupier interest and the quality office space supply in Bengaluru has driven rentals upward in the market. The average transacted rentals in Bengaluru grew by 6.6% YoY to INR 86.4/sq ft/month in 2023.
According to the report, Bengaluru’s residential market witnessed 1% YoY growth in the sales volume in 2023, recording 54,046 housing units in the year. Launches in the city recorded a growth of 18% YoY witnessing 51,126 units being launched in 2023 which when compared to same period last year was 38,640 units. The weighted average price of residential units in Bengaluru increased by 7% YoY to INR 5,900/ sq ft/ month.
Office Market Update 2023: January – December 2023
Demand-supply economics
Bengaluru registered an annual transaction volume of 12.5 mn sq ft in 2023, a moderation compared to a year ago, however, surpassing the 10-year average volume. In 2023, Bengaluru market witnessed a new supply infusion of 13.4 mn sq ft, leading to a stock accumulation of 215 mn sq ft. The market contains an adequate inventory to fulfil occupier demand in the near future.
BENGALURU OFFICE MARKET SUMMARY
| Parameter | 2023 | 2023 Change (YoY) |
| Completions in mn sq ft | 13.4 | -14.4% |
| Transactions in mn sq ft | 12.5 | -14.3% |
| Average transacted rent in INR/sqm/month
(INR/sq ft/month) |
86.4 | 7% |
Note: 1. 1 square metre (sq m) = 10.764 square feet (sq ft), Source: Knight Frank Research
Flex tenants and GCCs emerged as the leading occupants of office spaces in Bengaluru in 2023. The leasing activity by flex occupiers reached 3.8 mn sq ft comprising 30.3% of the overall transaction volume, reflecting a substantial 23% increase compared to 2022.
However, the momentum in flex space leasing that was robust during H1 2023, tapered in H2 2023. This shift suggests a resurgence in occupier inclination towards long-term leases, signalling a change in sentiment. The headwinds faced by the tech sector such as the anticipated slowdown in the US economy, have diminished and there is a renewed interest in returning to traditional office setups.
GCCs accounted for 30% of office space leasing volume in Bengaluru compared to 25% in 2022. Going ahead Bengaluru holds a significant scope of attracting GCC players.
Prospective drivers of office transaction volume in Bengaluru include tenants associated with India-facing businesses. In 2023, India-facing businesses constituted 25% of the total office leasing volume in Bengaluru. The growth outlook for businesses operating in India is highly favourable, given the expanding consumer base, increasing digitalisation, and ongoing economic development in the country.
Leasing share of third-party IT narrowed to 15% of total transactions in Bengaluru in 2023 compared to 27% in 2022.
| End-User Licensee/Buyer | Flex | GCC | India-Facing Business | Third Party IT | Total |
| Area transacted in mn sq ft | 3.8 | 3.8 | 3.1 | 1.8 | 12.5 |
Source: Knight Frank Research
Shantanu Mazumder, Executive Director, Bengaluru, Knight Frank India said, “The constituency of the occupier landscape has transformed in the city. The moderate leasing activity by third-party IT was positively cushioned by the market share consolidation by GCC, Flex and India-facing business. Bengaluru is an attractive market for GCC occupiers as the city is already an established global hub, has a diverse talent pool and a unique ecosystem comprising technology penetration, research & development, start-ups, academia and more. Bengaluru’s office market fundamentals remain strong. The acceleration of return to office by firms and the growth in India facing businesses along with stable business inflow from the western developed markets into India, should support the growth in the office market demand in the near term.”
Significant rental growth was predominantly observed in PBD East and the ORR micro markets. The development of transport infrastructure has heightened the occupier’s interest in both these micro-markets. The average transacted rentals in Bengaluru grew by 6.6% YoY to INR 86.4/sq ft/month in 2023.
PDB East witnessed a remarkable surge in rental value to 11%, driving up the rental range to INR 60-85/sq ft/ month. Though a moderate change of 1.7%, CBD & Off CBD commanded the highest rental range of 110-195/sq ft/ month.
BUSINESS DISTRICT-WISE RENTAL MOVEMENT
| Rental value range in H1 2022
INR/sq ft/month |
12-month change | 6-month change | |
| CBD & Off-CBD | 110-195 | 1.7% | 1.7% |
| SBD | 80-170 | 4.2% | 4.2% |
| PBD East | 60-85 | 11.5% | 7.4% |
| PBD South | 50-90 | 3.7% | 0.0% |
| PBD North | 50-95 | 7.4% | 7.4% |
| ORR | 95-130 | 7.0% | 4.7% |
Source: Knight Frank Research
Residential Market Update: January – December 2023
In 2023, Bengaluru registered a nine-year high sales volume of residential units- 54,046. The North Bengaluru micro-market is an emerging and one of the fastest growing clusters in the city. In 2023, the micro-market witnessed 22% of sales, with a sharp rise in the absolute volumes. The city witnessed new launches of 51,126 units, a multiyear high, as the market experienced a strong influx of new project launches in 2023 indicating a 18% year-on-year increase. South Bengaluru micro-market continued to dominate sales comprising a share of 39% of the total sales in the city in 2023.
BENGALURU RESIDENTIAL MARKET SUMMARY
| Parameter | 2023 | 2023
Change% (YoY) |
| Launches (housing units) | 51,126 | 18% |
| Sales (housing units) | 54,046 | 1% |
| Average price in INR/sq m
(INR/sq ft) |
INR 63,507.6
(INR 5,900) |
7% |
Note: 1 square metre (sq m) = 10.764 square feet (sq ft), Source: Knight Frank Research
In 2023, the mid-segment, priced between INR 5-10 mn remained predominant, comprising 50% of sales registering 26,836 units. The premium segment or >INR 10 mn segment followed, contributing 35% to total sales. The premium segment also saw the highest spike in YoY growth of 38% in the year, while the affordable segment contributed to 15% of the total sales in the year which on YoY basis saw a huge drop of 46%. This highlights an upward trajectory in the income landscape of the city.
BENGALURU TICKET SIZE SPLIT COMPARISON OF SALES DURING 2022 AND 2023
Source: Knight Frank Research
TICKET-SIZE SPLIT OF SALES IN 2023
| Ticket Size Categories | <5 mn | 5-10 mn | 10 mn> | Total |
| 2023 | 8,141 | 26,836 | 19,068 | 54,046 |
| YoY % change | -46% | 10% | 38% | 1% |
Source: Knight Frank Research
Shantanu Mazumder, Executive Director, Bengaluru, Knight Frank India, said, “Bengaluru observed a continuing momentum which showcased progression in sales, despites the headwinds arising from elevated interest rates. This indicates continuation in buyer appetite for home ownership in Bengaluru and ensures optimistic sentiment for 2024 for real estate in Bengaluru.”
Price change in 2023
In terms of residential prices, Bengaluru witnessed an annual growth of 7%, reaching a weighted average price of INR 5,900 per sq ft. The surge in prices was predominantly fuelled by growing demand, attributed to the prevalence of hybrid work structures and the return to office, prompting individuals to relocate to the city. In response to this demand, the supply of residential properties in the city is also on the rise, evident in the record-high launches observed in 2023. Going ahead, as the supply aligns with the demand, it is anticipated that the growth in prices will moderate in 2024.
The Northern region of Bengaluru micro market saw maximum residential price appreciation of 12.2%. The central region continues to be the most expensive micro-market with residential prices ranging between INR 21,000 – 31,519 per sq ft.
RESIDENTIAL PRICE MOVEMENT IN SELECT LOCATIONS
| Micro-market | Price range in H2 2023 INR/sq ft | 12-month change | 6-month change | ||
| INR/sq ft – Min | INR/sq ft – Max | ||||
| Langford Town | Central | 15,000 | 23,114 | 3.00% | 3.00% |
| Lavelle Road | Central | 21,000 | 31,519 | 3.00% | 3.00% |
| KR Puram | East | 4,000 | 7,753 | 5.90% | 1.30% |
| Whitefield | East | 4,750 | 9,415 | 11.10% | 5.70% |
| Marathahalli | East | 4,200 | 8,570 | 7.30% | 3.80% |
| Hebbal | North | 5,500 | 14,127 | 12.20% | 6.70% |
| Yelahanka | North | 4,200 | 9,014 | 10.10% | 5.70% |
| Thanisandra | North | 4,300 | 10,381 | 11.20% | 6.40% |
| Hennur | North | 4,200 | 10,401 | 10.60% | 5.00% |
| Sarjapur Road | South | 4,300 | 9,732 | 9.60% | 3.90% |
| Kanakpura Road | South | 4,200 | 8,507 | 8.60% | 4.20% |
| Electronic City | South | 3,500 | 7,372 | 8.70% | 4.50% |
| Bannerghatta Road | South | 4,200 | 8,223 | 8.50% | 4.00% |
| Yeshwantpur | West | 6,000 | 12,363 | 8.70% | 6.80% |
| Malleswaram | West | 8,200 | 16,292 | 7.90% | 7.90% |
| Rajajinagar | West | 8,300 | 18,034 | 8.80% | 7.50% |
| Tumkur Road | West | 3,750 | 7,223 | 9.70% | 6.50% |
Source: Knight Frank Research