In a remarkable turnaround, average office rents across India’s six major markets—Delhi-NCR, Mumbai, Pune, Hyderabad, Chennai, and Bengaluru—have surpassed pre-pandemic levels for the first time in 2024. According to a report by Colliers, this upward trend marks the culmination of a swift recovery trajectory following a significant downturn during the pandemic years. After a period of subdued demand in 2020 and 2021, leasing activity rebounded fully by 2022, with each subsequent year achieving record highs in Grade A office space uptake across the country.
Hyderabad and Pune were early achievers, reaching pre-pandemic rental levels in 2022. Bengaluru and Chennai followed suit in 2023, while Delhi-NCR and Mumbai completed their recovery in 2024. The report highlights that although Delhi-NCR was among the last to recover, it has recorded the highest rental growth compared to 2019, with an impressive rise of about 8%. Pune mirrored this growth, while Mumbai and Chennai experienced increases of 5-6% over the same period. Notably, prime micro-markets in Delhi-NCR, such as Golf Course Extension Road and Cyber City, witnessed rental surges of up to 25% in the last five years, underscoring the robust demand in these locations.
The demand-supply dynamics present an interesting picture. While Mumbai has seen a substantial decrease in vacancy levels since 2019, reaching approximately 20%, Hyderabad, typically a high-supply market, continues to grapple with a 25% vacancy rate. This imbalance reflects the differing recovery patterns across the markets. As occupancy rates stabilise, the demand for flexible and modern office spaces is anticipated to rise, with annual space take-up projected to reach around 60 million square feet in the medium term.
From a sustainability standpoint, the resurgence in the office market underscores a renewed commitment to eco-friendly practices in commercial real estate. The construction of energy-efficient buildings and the integration of sustainable design elements have become focal points for developers and occupiers alike. This shift not only caters to the evolving needs of tenants but also addresses civic concerns regarding urban development. By prioritising sustainability, cities can create healthier work environments while contributing to their long-term resilience. The ongoing growth in office space leasing not only reflects economic recovery but also highlights a collective move towards building smarter, more sustainable urban landscapes.
