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Office rentals across India’s top cities have continued to rise, with Bengaluru and Delhi-NCR crossing the INR 100 per sq ft mark for the first time, joining Mumbai. According to Knight Frank, strong leasing demand and limited new supply have driven this growth. Rental values increased between 2 per cent and 15 per cent annually during the past quarter across eight major cities. Despite a sharp rise in new completions, demand has significantly outpaced supply, leading to lower vacancy levels and tighter market conditions across key office markets.
Average monthly rentals for prime office spaces in Bengaluru and Delhi-NCR have crossed INR 100 per sq ft for the first time, driven by strong demand for quality workspaces and limited new supply, according to a report by Knight Frank. Mumbai continues to remain above this benchmark. Advertisement
Data from the consultant showed that office rentals increased between 2 per cent and 15 per cent across eight major Indian cities during the January–March quarter compared to the same period last year. The highest annual growth of 15 per cent was recorded in Delhi-NCR and Kolkata.
Knight Frank stated that supply constraints across key markets have supported a sustained rental upcycle since early 2022, with rental growth remaining positive across all major cities in the latest quarter.
In terms of city-wise performance, Mumbai recorded a 6 per cent annual increase, with average rentals reaching INR 125 per sq ft per month. Delhi-NCR saw a sharper rise of 15 per cent, taking rents to INR 105 per sq ft. Bengaluru witnessed a 7 per cent increase, with average rents at INR 100.6 per sq ft.
Other cities also saw steady growth. Pune recorded a 5 per cent increase to INR 80.9 per sq ft, while Hyderabad and Chennai saw rents rise by 8 per cent to INR 77.5 and INR 74.5 per sq ft, respectively. Kolkata matched Delhi-NCR with a 15 per cent increase, reaching INR 48.3 per sq ft. Ahmedabad saw a more moderate 2 per cent rise to INR 45 per sq ft.
On the demand side, office leasing reached a record 29.9 million sq ft during the quarter across the eight cities, marking a 6 per cent increase over the previous year. At the same time, total new supply stood at 14 million sq ft, reflecting a sharp 154 per cent year-on-year rise but still remaining significantly lower than the space absorbed.
The consultant highlighted that demand continues to outpace supply, as developers remain more focused on residential projects due to comparatively lower risks and faster returns. This imbalance has been visible for several years.
As a result, vacancy levels have steadily declined from 17.2 per cent in 2021 to 13.9 per cent in the latest quarter, indicating tightening market conditions.
The office development segment in India remains limited to a relatively small group of large developers due to the high capital investment required. Key players include DLF Limited, Tata Realty & Infrastructure, K Raheja Corp, Embassy Group, Sattva Group, RMZ Corp, Hiranandani Group, Brigade Group, Panchshil Realty, Bharti Realty and The Wadhwa Group.
In addition, four Real Estate Investment Trusts (REITs) hold significant office portfolios. These include Embassy Office Parks REIT, Mindspace Business Parks REIT, Brookfield India Real Estate Trust and Knowledge Realty Trust backed by Sattva Group and Blackstone.
In the Delhi-NCR market, Signature Global has entered into a joint venture with RMZ Group to develop an office project in Gurugram, while Gaurs Group is planning a large office development along the Noida Expressway.
Source PTI
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