Stable Rents in Delhi-NCR, Mumbai, and Bangalore Office Markets in Q2 2024
The prime office rental rates in Delhi-NCR, Mumbai, and Bangalore have remained stable in Q2 2024, driven by a sustained strategic interest in India's consumer markets and skilled labor pool.
Prime Office RentsDelhi NcrMumbaiBangaloreOffice Space MarketKnight FrankAsia Pacific Prime Office Rental IndexReal Estate MumbaiJul 29, 2024
Bangalore retained its position as the leading destination among the three Indian cities, with 4.9 million square foot (msf) leased in Q2 2024. The leadership teams actively encouraging employees to return to the office has also positively impacted the transaction volumes in the market.
Prime office rental rates in Delhi-NCR, Mumbai, and Bangalore have remained stable in YoY terms, and the current market momentum points towards a stable rental in the rest of 2024 as well. In summary, the quarterly report revealed that 15 out of 23 tracked cities reported either stable or rising rental rates.
Shishir Baijal, chairman and managing director, Knight Frank India, said, 'India's office space market has seen a surge in global corporate interest, reflecting the country's status as one of the fastest-growing large economies. This has led to record-high transaction volumes in the first half of the year 2024, with a 33% rise YoY, driven by Indian businesses and GCCs. Rental rates have remained steady in the three major occupier markets. With stable socio-economic and political conditions and a strong growth trajectory, we anticipate commercial office space hitting record highs.'
The prime office market in Delhi-NCR has sustained rental values consistently over the past six quarters. With a prime office rent of Rs 340/sqft/month, it ranks as the fifth most expensive office market in the APAC region.
Mumbai's office leasing market demonstrated remarkable growth, with around 3.0 msf leased, marking a 183.1% YoY increase. The prime office rent of the city was recorded at Rs 302/sqft/month, ranking it as the eighth most expensive commercial market in the APAC region.
Bangalore ranks 18th and is among the most affordable prime office markets in the APAC region. The prime office rent in the city was recorded at Rs 137/sqft/month, with a marginal YoY increase of approximately 1.3%.
Tim Armstrong, global head of occupier strategy and solutions, Knight Frank, said, 'The current trend reflects a business cycle downturn. Major office sectors such as finance and technology continue to downsize staff strength amid ongoing uncertainty in the business environment. This selective approach will likely keep demand for office spaces restrained. Lease renewals will remain popular, while companies may also consider consolidating their office spaces due to falling rents prompting a flight-to-quality move. No doubt, occupiers face a slate of competing factors, balancing the new office culture and ESG objectives against business considerations. Despite reduced capital expenditure, occupiers are encouraged to remain aware of the region's ample supply pipeline to explore quality options and capitalize on current conditions by securing favorable rates, given that new supply is expected to tighten due to high interest rates impacting future construction.
Frequently Asked Questions
What is the current prime office rent in Delhi-NCR?
The prime office rent in Delhi-NCR is Rs 340/sqft/month, ranking it as the fifth most expensive office market in the APAC region.
Which city saw the highest transaction volume in Q2 2024?
Bangalore retained its position as the leading destination among the three Indian cities, with 4.9 million square foot (msf) leased in Q2 2024.
What is the forecast for prime office rents in the next 12 months?
The current market momentum points towards a stable rental in the rest of 2024 as well, with 15 out of 23 tracked cities reporting either stable or rising rental rates.
What is driving the demand for office spaces in India?
The sustained strategic interest in India's consumer markets and skilled labor pool is driving the demand for office spaces in India.
What is the impact of the business cycle downturn on office leasing activities?
The business cycle downturn is likely to keep demand for office spaces restrained, with lease renewals remaining popular and companies considering consolidating their office spaces due to falling rents.
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