India's top office markets experienced up to an 8 percent year-on-year rise in rentals in January-March period, with Delhi-NCR leading the pack, real estate consultancy Colliers has said.
Robust demand along with infusion of high-end quality supply led to the uptick, Colliers’ Asia-Pacific Office Markets April 2024 report released on May 9 said.
After witnessing a dip during the coronavirus on subdued demand, occupier exits and remote work trends, rentals have seen a considerable growth, so far, in 2024, surpassing pre-pandemic levels.
Occupiers across the Asia-Pacific region is willing to pay higher rentals for superior quality offices, particularly in locations which facilitate talent acquisition, it said.
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The report said that weighted average quoted (WAQ) rents in Delhi-NCR in rose to Rs 101.5 per square feet a month in the first quarter of 2024 from Rs 93.3 in the year-ago period. The growth of 8.8 percent is the highest among the six cities —Mumbai, Bengaluru, Hyderabad, Chennai, Pune and Delhi-NCR.
Delhi was followed by Chennai, with average monthly office rentals growing 6.6 percent YoY. In Pune, monthly rentals surged 4.2 percent, while Mumbai and Bengaluru were up 4 percent each. Hyderabad at 2.2 percent saw the lowest increased among the six cities.
In some high-performing markets among the top 6 cities rents were up by up to 20 percent. These include MG Road Gurugram in Delhi-NCR (18.2 percent. SBD1 (includes Koramangala, CV Raman Nagar, IRR, Indiranagar, Old Airport Road, Old Madras Road, Rajajinagar and others) in Bengaluru saw rents go up 15.5 percent and Pallavaram Thoraipakkam Road (PTR) in Chennai 10.9 percent.
Flex spaces are gaining prominence, too. At 8.7 million square feet of leasing in 2023 and highest ever space take-up by flex spaces, the segment witnessed remarkable expansion in recent years, said Arpit Mehrotra, managing director, office services- India, Colliers.
“Flex spaces are likely to continue the momentum in 2024 and is expected to constitute 15-20 percent of total office leasing across the top 6 cities," Mehrotra said.
Global Capability Centres
In Q1, India continued to witness traction in Global Capability Centre (GCC) leasing activity. Around 5 million square feet (msf) of leasing activity by GCCs, represented 37 percent of the total office leasing across the six cities, the report said.
India's ascent as a premier GCC hub in the APAC region underscores its unmatched value proposition for global corporates, said Vimal Nadar, senior director and head of research, Colliers India.
“In the next three years, the projected leasing of 45-50 million square feet of office space by GCCs is poised to further solidify India's position, driving over 40 percent of the country's office leasing activity,” Nadar said.
Heightened GCC activity is fuelled by diverse occupiers spanning sectors such as BFSI, technology, engineering and manufacturing, and healthcare, the report said.
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