South Indian cities of Bengaluru, Chennai and Hyderabad have outperformed the other regions in terms of overall office market activity. Southern cities witnessed up to 26 per cent rise in average office rentals between 2019 and 2024, according to Anarock research.
Bengaluru leads with a 26 per cent rise in office rentals in the period – from Rs 74 per sq ft per month in 2019 to Rs 93 per sq ft per month in 2024, followed by Hyderabad with 25 per cent growth – from Rs 56 per sq ft in 2019 to Rs 67 per sq ft in 2024 and Chennai with 20 per cent rise – from Rs 60 per sq ft in 2019 to Rs 75 per sq ft in 2024.
Peush Jain, MD-Commercial Leasing and Advisory, Anarock Group said, “These cities have had an average growth of 25 per cent in rentals over the last 6 years with 57 per cent share in new supply; is due to its robust IT infrastructure ecosystem with availability of skilled workforce that has enabled corporations to invest in these cities.”
In contrast, the National Capital Region (NCR) saw average monthly rental growth of 10 per cent in the period – from Rs 78 per sq ft per month in 2019 to Rs 86 per sq ft in 2024.
Western cities including Pune saw 19 per cent growth – from Rs 68 per sq ft to Rs 81 per sq ft in 2024 while Mumbai Metropolitan Region (MMR) saw 13 per cent growth – from Rs 124 per sq ft in 2019 to Rs 140 per sq ft in 2024.
New office supply
In the last six years (2019-2024) a total of nearly 283.21 million sq ft of office space has been added across the top seven cities with 2022 recording the highest new supply addition of 57.75 million sq ft Overall, the South cities added nearly 172.96 million sq ft of office space comprising a whopping 61 per cent overall share. Western cities added over 60.31 million sq ft space or 21per cent share. NCR added 17per cent share or approximately 47.39 million sq. ft of new office supply.
Net office absorption across the top seven cities in the six-year period stood at nearly 224.18 million sq ft. Of the net absorption in the last six years, South cities comprised 56 per cent share (125.84 million sq ft), followed by West with 25 per cent share (55.18 million sq ft).
The highest net absorption in the last six years was in 2024 – of approximately 49.95 million sq ft. Again, Southern cities comprised the highest 55 per cent share or about 27.32 million sq ft, followed by the West cities with 24 per cent share and NCR with 19 per cent share while Kolkata with just 2 per cent share.
Top seven Indian cities witnessed new supply addition of over 48.11 million sq ft in 2024 while office vacancies dropped to 16.5 per cent in 2024 as against 17.8 per cent in 2023. Among the top seven cities, Chennai had the least office vacancy of 9.30 per cent in 2024.>
