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Office rents rose up to 8% in Q1 2024, led by Delhi-NCR with an 8.8% rise, surpassing pre-pandemic levels. Colliers' report highlighted robust demand and high-quality supply as driving factors. Delhi-NCR saw a weighted average quoted rent increase to INR 101.5 per sq ft/month. Chennai and Pune followed with 6.6% and 4.2% growth respectively. Flex spaces gained prominence, constituting 8.7 million sq ft of leasing in 2023. Global Capability Centre (GCC) leasing activity in India accounted for 37% of total office leasing, with 5 million sq ft leased. GCC activity is projected to further solidify India's position as a premier hub.
According to Colliers' April 2024 report, office rents increased by up to 8% in the first quarter of 2024, with Delhi-NCR leading the way with an 8.8% rise, surpassing pre-pandemic levels. This growth was fueled by robust demand and the introduction of high-quality supply. Despite a dip during the pandemic, rentals have rebounded strongly in 2024, driven by increased demand and a return to pre-pandemic levels. Occupiers in the Asia-Pacific region are willing to pay higher rents for superior office quality, especially in locations conducive to talent acquisition. Advertisement
In Delhi-NCR, the weighted average quoted (WAQ) rents rose to INR 101.5 per square foot per month, up from INR 93.3 in the previous year. Chennai followed with a 6.6% year-on-year growth in monthly office rentals, while Pune saw a 4.2% increase. Mumbai and Bengaluru experienced a 4% rise each, while Hyderabad had the lowest increase at 2.2%.
Some top-performing markets within the six cities witnessed even higher rental increases, with MG Road Gurugram in Delhi-NCR seeing an 18.2% surge. SBD1 in Bengaluru saw rents rise by 15.5%, and Pallavaram Thoraipakkam Road (PTR) in Chennai saw a 10.9% increase.
Flex spaces are also gaining prominence, with a record-high 8.7 million square feet of leasing in 2023. Arpit Mehrotra, Managing Director of Office Services-India at Colliers, predicts that flex spaces will continue to grow in 2024, constituting 15-20% of total office leasing across the top six cities.
Furthermore, Global Capability Centre (GCC) leasing activity remained strong in Q1, with around 5 million square feet leased, representing 37% of total office leasing across the six cities. Vimal Nadar, Senior Director and Head of Research at Colliers India, emphasized India's ascent as a premier GCC hub in the APAC region.
He predicts that over the next three years, GCCs will lease 45-50 million square feet of office space, driving over 40% of the country's office leasing activity.
The heightened GCC activity is fueled by diverse occupiers spanning sectors such as BFSI, technology, engineering, manufacturing, and healthcare. This trend underscores India's unmatched value proposition for global corporations.
Overall, the surge in office rents in Q1 2024, led by Delhi-NCR, reflects a rebound in demand and a return to pre-pandemic levels. This growth is driven by robust demand, high-quality supply, and increasing flexibility in office space arrangements. The strong leasing activity by GCCs further solidifies India's position as a premier hub for global corporations, with significant leasing expected in the coming years.
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