According to a report, office rental prices in key Indian cities have exceeded the levels seen before the pandemic.
New Delhi [India], October 23: A report by Colliers, a service and investment management company, indicates that average office rents in six major cities in India have surpassed pre-pandemic levels, increasing by 2-8 percent compared to 2019.
The report emphasizes that this recovery has been fueled by a strong demand for office space, which has steadily grown since 2022. "With strong, consistent demand, average rentals have also surpassed pre-pandemic levels (2019) across all the six major office markets for the first time in 2024," the report stated.
After experiencing a significant decline in demand during 2020 and 2021, leasing activity rebounded in 2022, marked by a record uptake of Grade A office spaces. However, the rental recovery has been gradual, following a U-shaped trajectory.
Cities like Hyderabad and Pune reached pre-pandemic rent levels as early as 2022, while Bengaluru and Chennai did so in 2023. Delhi NCR and Mumbai were the last to recover fully, completing this cycle in 2024.
The report also highlighted that Delhi NCR and Pune recorded the highest rental increases, with rents rising by approximately 8 percent from 2019 to 2024. Mumbai and Chennai followed with increases of 5-6 percent.
"Although rental growth will vary across cities, the annual increase in average quoted rentals at the end of 2024 is likely to be higher for certain cities like Delhi NCR and Pune compared to other markets," the report noted.
Additionally, the report indicated that certain core micro-markets, typically found in prime business districts, have outperformed city averages, witnessing rent increases of up to 25 percent over the past five years. For instance, significant growth was observed in Delhi NCR's Golf Course Extension Road, Noida Expressway, and Cyber City.
High-demand areas like Outer Ring Road in Bengaluru and OMR Zone 1 in Chennai experienced increases ranging from 5 to 20 percent. "The higher rental growth reflects occupiers' preference for Grade A developments in localities that offer superior connectivity and are near residential catchment areas," the report concluded.