Office Rents in India Surpass Pre-Pandemic Levels, Delhi NCR Takes the Lead: Colliers India Report
Office rents in India's major cities have surpassed pre-pandemic levels in 2024, with Delhi NCR leading the pack with an 8.3% increase compared to 2019. Pune and Mumbai follow closely with significant rises in rental prices.
Office RentsCommercial Real EstateDelhi NcrColliers IndiaPrepandemic LevelsReal EstateOct 23, 2024
Delhi NCR has seen the highest increase, with rents rising by 8.3% in 2024 compared to 2019. Pune closely follows with a 7.7% increase, while Mumbai comes in third with a 5.8% rise. The report indicates that “Delhi NCR and Pune saw the highest rise in average rentals at about 8% each during the 2019-2024 period, followed by Mumbai and Chennai with about 5-6% rise in the same period.”
The average rental prices across these cities increased from ₹99.5 per square foot in 2019 to ₹101.3 per square foot in 2024. This growth is a testament to the swift recovery of the office market post-pandemic, which experienced a sharp V-shaped demand resurgence after a period of sluggish demand in 2020 and 2021.
By 2022, leasing activity had rebounded fully, and each subsequent year has seen record-high uptake of Grade A office space at the national level. While the recovery in rental rates lagged behind the demand recovery, it has now fully completed, following a more gradual U-shaped trajectory.
Core micro markets in Delhi NCR, including Golf Course Extension Road, Noida Expressway, and Cyber City, have seen rental increases of up to 25% over the past five years. In Bengaluru, high-demand areas like Outer Ring Road (ORR) and Whitefield have experienced rental growth of 5-10%, compared to an overall city-level increase of only 2% from 2019 to 2024. Similarly, key micro markets such as OMR Zone 1 in Chennai and Goregaon/JVLR and BKC in Mumbai have reported rental increases of 10% to 20% from pre-pandemic levels, while the average rental growth in these cities remains lower at 5% to 6%.
According to the report, “Core micro markets are typically located in CBD and SBD areas of respective cities. The higher rental growth is reflective of occupiers’ preference for Grade A developments in localities that enjoy superior connectivity and are located in proximity to residential catchment areas.”
Arpit Mehrotra, Managing Director of Office Services at Colliers India, comments, “Average rentals across all six major markets have breached pre-pandemic levels for the first time in 2024. Although the rental growth will vary across cities, the annual increase in average quoted rentals at the end of 2024 is likely to be higher for certain cities like Delhi NCR and Pune as compared to other markets. Moreover, as demand scale-up in Indian commercial real estate solidifies, annual space take-up to the tune of 60 million sq ft is likely to be the new norm in the medium-term.”
Hyderabad and Pune reached pre-pandemic rental levels in 2022, while Bengaluru and Chennai followed in 2023. Delhi NCR and Mumbai completed their recovery in 2024, marking a significant turnaround in the commercial real estate sector.
Frequently Asked Questions
Which city saw the highest increase in office rents in 2024?
Delhi NCR saw the highest increase in office rents in 2024, with an 8.3% rise compared to 2019.
What is the average rental price per square foot in 2024 compared to 2019?
The average rental price increased from ₹99.5 per square foot in 2019 to ₹101.3 per square foot in 2024.
Which areas in Delhi NCR saw the highest rental increases?
Core micro markets in Delhi NCR, including Golf Course Extension Road, Noida Expressway, and Cyber City, saw rental increases of up to 25% over the past five years.
How did the office market recover post-pandemic?
The office market experienced a sharp V-shaped demand resurgence after a period of sluggish demand in 2020 and 2021, with leasing activity rebounding fully by 2022.
What is the new norm for annual space take-up in the medium-term?
Annual space take-up to the tune of 60 million sq ft is likely to be the new norm in the medium-term as demand scale-up in Indian commercial real estate solidifies.
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