Bengaluru, 23 October 2024 — The Indian office market has marked a significant milestone in 2024, with average rents across the top six office markets surpassing pre-pandemic levels for the first time since 2019. This surge, driven by a robust revival in demand, shows a rental increase of 2-8% compared to 2019 figures.
After a period of subdued demand in 2020 and 2021 due to the pandemic, leasing activity bounced back vigorously, achieving all-time highs in Grade A office space uptake since 2022. Notably, core micro markets experienced even more pronounced growth, with rental increases reaching up to 25% over the same period.
While markets like Hyderabad and Pune recovered to pre-pandemic rental levels as early as 2022, cities such as Bengaluru and Chennai followed suit in 2023. Delhi NCR and Mumbai finally completed their recovery cycle in 2024, with Delhi NCR reporting the highest growth in average rentals at approximately 8.3%.
City-Wise Rental Trends
A detailed analysis reveals the following city-wise rental trends (in INR/sq ft):
- Bengaluru: 2019 – 94.5 | 2024 – 96.7 (+2.3%)
- Chennai: 2019 – 74.0 | 2024 – 77.8 (+5.1%)
- Delhi NCR: 2019 – 97.8 | 2024 – 105.9 (+8.3%)
- Hyderabad: 2019 – 73.4 | 2024 – 76.7 (+4.5%)
- Mumbai: 2019 – 143.3 | 2024 – 151.6 (+5.8%)
- Pune: 2019 – 75.8 | 2024 – 81.6 (+7.7%)
Micro Market Dynamics
Core micro markets have outperformed the overall city rental growth significantly. In Delhi NCR, areas like Golf Course Extension Road and Cyber City saw increases between 5-25%. Bengaluru’s Outer Ring Road and Whitefield witnessed a 5-10% rise, while other major micro markets in Chennai and Mumbai also reported gains of 10-20%.
Cumulative Demand and Supply
Over the past five years, the cumulative demand for Grade A office space across these six major markets reached 264 million sq ft, closely mirroring supply levels at 234 million sq ft. This balance has kept vacancy rates relatively stable. Mumbai and Delhi NCR reported significant drops in vacancy rates, while Hyderabad experienced an increase due to a historically high supply.
Market Outlook
Industry experts predict that average office rentals may continue to rise, with potential annual growth rates of up to 10% across key cities in 2024. As demand in Indian commercial real estate solidifies, a continued annual space uptake of around 60 million sq ft is expected.
“The recovery of the office market is a testament to the resilience of occupiers and developers alike,” said Arpit Mehrotra, Managing Director of Office Services at Colliers India. “The trajectory we’re seeing suggests a strong foundation for future growth in the sector.”
This recovery signals not only a return to form but also a promising outlook for the Indian office market moving forward.
Also Read: Survey Reveals 57% of Investors Favor Steady Rental Yields in Fractional Real Estate Ownership
