Prime Office Space Rentals in India Witness 7 Per Cent Increase in First Half of FY24

As per an Anarock report, the rental rates for prime office spaces have experienced a 7% year-on-year growth, reaching an average of Rs 83 per square feet per month in seven major cities during the first six months of the current fiscal. This increase is attributed to rising construction costs.

Anarock released its India Office Market Update for the first half (April-September) of the 2023-24 fiscal, indicating that the rental values for Grade A office spaces averaged Rs 83 per square feet per month across these cities, up from Rs 77.5 per square feet in the same period last year.

However, the first half of this fiscal year saw a relatively stagnant phase for commercial office space activities in the top seven cities, with both net absorption and new completions barely changing compared to the previous year. The report highlighted a 5% increase in new office supply and a slight 1% decrease in net office absorption during the period under review.

Prashant Thakur, Regional Director & Head of Research at Anarock, noted that the average rental values in the top seven cities saw a 7% increase in the first half of FY24 compared to the same period in FY23. This rise was primarily due to increased construction and input costs.

During the April-September period of this fiscal, Chennai recorded the highest year-on-year increase of 10% in average monthly office rental values, climbing to Rs 68 per sq ft from Rs 62 per square feet. Hyderabad followed with an 8% rise in average rent to Rs 66 from Rs 61 per square feet. Bengaluru, Pune, and Kolkata each registered a 7% annual increase in office rent, while the Mumbai Metropolitan Region (MMR) and Delhi-NCR saw a 5% increase each.

In Bengaluru, the average monthly office rental climbed to Rs 90 per square feet from Rs 84. Pune's average office rental rose to Rs 79 from Rs 74 per square feet, and in Kolkata, rentals increased to Rs 58 per sq ft from Rs 54. MMR, the country's most expensive office market, saw its rental increase to Rs 136 per square feet from Rs 130, and in the NCR, the average office rentals rose to Rs 85 from Rs 81 per square feet.