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Delhi-NCR ranks as the sixth most expensive office rental market in the Asia-Pacific (APAC) region, with stable rents at INR 340 per square foot per month, according to Knight Frank. While Hong Kong remains the costliest, Indian cities like Mumbai and Bengaluru saw year-on-year rental growth of 5% and 3%, respectively, driven by strong demand from Global Capability Centres (GCCs) and domestic-focused companies. Bengaluru led GCC-driven transactions, contributing 62% of its office space trade. APAC office markets show resilience with stable or increasing rents across 16 of 23 cities. A "flight-to-quality" trend is expected to dominate amid steady leasing activity.
Delhi-NCR has been identified as the sixth most expensive office rental market in the Asia-Pacific (APAC) region, according to a recent report by Knight Frank. While Hong Kong remains the most expensive market, Delhi-NCR's rental rates have shown resilience, remaining stable in the third quarter of 2024. This stability contrasts with the upward trends seen in other major Indian cities, such as Mumbai and Bengaluru, which experienced year-over-year rental increases of 5% and 3%, respectively. Advertisement
The growth in office rentals across these cities can be attributed to strong demand from businesses, particularly Global Capability Centres (GCCs) and companies focusing on the Indian market. These sectors are driving a surge in transactions, leading to record-high volumes in Q2 and Q3 of 2024. The optimism surrounding India's economic outlook, coupled with its large talent pool and favourable business environment, has encouraged this growth. Notably, Bengaluru has emerged as a key hub for GCCs, with 62% of the office space traded in the city coming from this sector, marking a significant 158% increase in volume compared to the previous year.
Despite the overall stability in Delhi-NCR, the prime office rental rate stands at INR 340 per square foot per month. This figure reflects the competitive nature of the market, where 16 of the 23 monitored cities in the APAC region have reported stable or increasing rents year-on-year. This trend indicates a broader recovery in the office rental market, with many businesses returning to physical spaces after the pandemic.
While Delhi-NCR and Mumbai maintain robust rental values, Bengaluru remains one of the more affordable markets in the region, with prime office rents at INR 138 per square foot per month. This affordability could attract more businesses looking for cost-effective solutions while still providing access to a skilled workforce.
Looking ahead, the supply of office space in the APAC region is expected to remain favourable for tenants. The delivery of over 12 million square metres of office space in 2024 has led landlords to adopt flexible strategies to maintain occupancy. However, the supply pipeline for 2025 is projected to decrease by about 20%, which may gradually tighten availability. As leasing activity increases, the trend of "flight-to-quality" is expected to continue, with tenants seeking premium office spaces that cater to their evolving needs.
In summary, while Delhi-NCR holds its position as a high-cost office market, the overall landscape in the APAC region is characterised by growth and stability, driven by strong demand and strategic business decisions. As companies adapt to the changing economic environment, the focus on quality office space will likely shape the future of commercial real estate in India and beyond.
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