Average office rents across top 6 cities breach pre-pandemic levels: Report

Office rents in Delhi-NCR clock the highest increase, rising by 8.3% in 2024 compared to 2019

Average office rents across India’s six major cities have for the first time in 2024 “breached” pre-pandemic levels of 2019, said a report on Wednesday.

Rentals nationwide increased averagely from Rs 99.5 per square foot in 2019 to Rs 101.3 per sq ft in 2024, according to Colliers India, a real estate advisory firm.

“In the post-pandemic era, demand recovery in the office market has been swift, following a steep V-shaped recovery trajectory. After subdued demand in 2020 and 2021, leasing activity had fully bounced back by 2022,” said the report. “In fact, since 2022, each year has been witnessing new all-time-high Grade A office space uptake at India level. The rental recovery in the Indian office market, albeit relatively slower than the demand recovery trajectory, has finally been fully complete, thus forming an elongated U-shaped pattern.”

Office rents in Delhi National Capital Region (NCR) surged by 8.3 per cent in 2024 compared to 2019 and the most in the country. Pune witnessed the second-highest rise in office rent, increasing by 7.7 per cent. Mumbai is third with a rental change of 5.8 per cent.

Hyderabad and Pune achieved pre-pandemic rent levels in 2022. While Bengaluru and Chennai crossed 2019 rental levels in 2023, Delhi NCR and Mumbai completed the recovery cycle in 2024.

“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,” said Arpit Mehrotra, managing director, office services, India, Colliers.

Overall, since 2019, Grade A office space has witnessed an uptake of about 264 million sq ft (msf). Mehrotra expects the annual space take-up of about 60 msf to be the new norm in the medium-term “as demand scale-up in Indian commercial real estate solidifies, notwithstanding unforeseen events.”