Office rents rise up to 8.3% in 2024, Delhi NCR leads: Colliers India

Office rents in India's six major cities have surpassed pre-pandemic levels for the first time in 2024, according to the latest report released today by Colliers India, real estate advisory firm. Office rents in Delhi NCR saw the highest increase, rising by 8.3% in 2024 compared to 2019. Pune followed with a 7.7% increase, while Mumbai came in third with a 5.8% rise.

“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,” says the report. 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.

The average rental prices increased from ₹99.5 per square foot in 2019 to ₹101.3 per square foot in 2024, the report states.

The report highlighted that the office market experienced a swift recovery post-pandemic, following a sharp V-shaped demand resurgence. After a period of sluggish demand in 2020 and 2021, leasing activity rebounded fully by 2022. Since then, each subsequent year has seen record-high uptake of Grade A office space at the national level. Although the recovery in rental rates has 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. Likewise, 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%.

“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 of residential catchment areas,” it adds.

“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, 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, notwithstanding unforeseen events, annual space take up to the tune of 60 million sq ft is likely to be the new norm in the medium-term,” says Arpit Mehrotra, managing director, Office services, India, Colliers.