Pune, Mumbai See Major Hikes as Office Rentals Surpass 2019 Levels

For the first time in 2024, average office rents across India’s six largest cities have exceeded pre-pandemic levels, according to a report released on Wednesday by Colliers India, a real estate advisory firm.

Nationwide, average office rents have risen from Rs 99.5 per square foot in 2019 to Rs 101.3 per square foot in 2024. This marks a significant recovery for the office rental market, which saw subdued demand during 2020 and 2021 but experienced a sharp V-shaped recovery by 2022.

The report highlights that leasing activity in India’s office market has hit all-time highs each year since 2022, with demand for Grade A office spaces surging. While demand for office space bounced back quickly, the rental recovery has followed a slower, U-shaped trajectory, now reaching completion in 2024.

Delhi NCR led the surge in rental growth, with a notable increase of 8.3% compared to 2019, making it the highest in the country. Pune came in second with a 7.7% rise, while Mumbai saw a 5.8% increase. Hyderabad and Pune were the first cities to achieve pre-pandemic rental levels in 2022, followed by Bengaluru and Chennai in 2023. Delhi NCR and Mumbai completed their recovery cycle this year.

Arpit Mehrotra, managing director of office services at Colliers India, noted, “All six major markets have now surpassed their pre-pandemic rental levels. While rental growth will vary by city, Delhi NCR and Pune are expected to see the largest increases by the end of 2024.”

Since 2019, Grade A office spaces have seen an impressive uptake of around 264 million square feet. Mehrotra predicts that the annual demand for office space will stabilize at approximately 60 million square feet in the near term, as the demand in Indian commercial real estate strengthens, barring any unexpected disruptions.