New Delhi [India], October 23 : The average office rents in India's six major cities have exceeded pre-pandemic levels, rising by 2-8 per cent compared to 2019, highlights a report by Colliers, a service and investment management company.
The report highlighted that this recovery has been driven by strong demand for office space, which has grown steadily since 2022.
"With strong, consistent demand, average rentals have also surpassed the pre-pandemic levels (2019) across all the six major office markets for the first time in 2024" said the report.
Following a steep drop in demand during 2020 and 2021, the report added that the leasing activity bounced back in 2022, with record-high uptake of Grade A office spaces. However, rental recovery has been slower, forming a U-shaped trajectory.
While cities like Hyderabad and Pune reached pre-pandemic rent levels as early as 2022, Bengaluru and Chennai did so in 2023. Delhi NCR and Mumbai were the last to fully recover, completing the cycle in 2024.
The report also noted that Delhi NCR and Pune saw the highest rental increases, with rents rising by about 8 per cent between 2019 and 2024. Mumbai and Chennai followed with a 5-6 per cent rise.
"Although the rental growth will vary across cities, 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" the report added.
The report also highlighted that certain core micro markets, typically located in prime business districts, have outperformed the broader city averages. These areas have seen rent increases of up to 25 per cent over the past five years. For example, Delhi NCR's Golf Course Extension Road, Noida Expressway, and Cyber City recorded significant growth.
Similarly, high-demand areas like Outer Ring Road in Bengaluru and OMR Zone 1 in Chennai saw increases of 5-20 per cent.
"The higher rental growth is reflective of occupiers' preference for Grade A developments in localities that enjoy superior connectivity and are located in proximity of residential catchment areas" the report added.