Office Rents in India’s Major Cities Surpass Pre-Pandemic Levels
In a recent report by Colliers, a service and investment management company, it was revealed that office rents in six major Indian cities have exceeded pre-pandemic levels, increasing by 2-8% compared to 2019. This recovery is attributed to a strong demand for office space, which has been growing steadily since 2022.
The report noted that after a significant drop in demand during 2020 and 2021, leasing activity rebounded in 2022 with a record uptake of Grade A office spaces. However, the rental recovery followed a U-shaped trajectory. Cities like Hyderabad and Pune reached pre-pandemic rent levels by 2022, while Bengaluru and Chennai did so in 2023. Delhi NCR and Mumbai were the last to recover, completing the cycle in 2024.
Delhi NCR and Pune experienced the highest rental increases, with rents rising by about 8% between 2019 and 2024. Mumbai and Chennai saw a 5-6% rise. The report predicts that the annual increase in average quoted rentals at the end of 2024 will be higher for cities like Delhi NCR and Pune compared to others.
Core micro markets in prime business districts have outperformed broader city averages, with rent increases of up to 25% over the past five years. Notable areas include Delhi NCR’s Golf Course Extension Road, Noida Expressway, and Cyber City, as well as Bengaluru’s Outer Ring Road and Chennai’s OMR Zone 1. The report attributes this growth to occupiers’ preference for Grade A developments in well-connected localities near residential areas.
Doubts Revealed
Pre-Pandemic Levels -: This refers to the time before the COVID-19 pandemic started in early 2020. It means the situation or condition before the pandemic affected things.
Colliers -: Colliers is a global real estate services and investment management company. They provide expert advice and services to help people buy, sell, or manage properties.
Leasing Activity -: Leasing activity means the process of renting out office spaces to businesses. It involves agreements where companies pay to use office spaces for a certain period.
Hyderabad and Pune -: Hyderabad and Pune are major cities in India. Hyderabad is known for its technology industry, while Pune is known for its educational institutions and IT companies.
Bengaluru and Chennai -: Bengaluru, also known as Bangalore, is India’s tech hub, famous for its IT industry. Chennai is a major city in South India, known for its cultural heritage and automobile industry.
Delhi NCR -: Delhi NCR stands for National Capital Region, which includes Delhi and nearby areas like Gurgaon, Noida, and Ghaziabad. It’s a large urban area with many businesses and offices.
Core Micro Markets -: Core micro markets are specific areas within a city that are very popular for business activities. They often have higher demand and prices for office spaces compared to other parts of the city.