Delhi-NCR has been ranked at the fifth most expensive office rental market in the Asia Pacific (APAC) region, according to a recent report from property consultancy Knight Frank India, showing the region’s strong commercial real estate sector.
The report, released on July 29, 2024, highlights key trends and developments in the commercial real estate sector across major APAC cities, as published by the Hindustan Times.
Delhi-NCR’s prime office rental market has shown stability over the last six quarters. With a rental rate of ₹340 per square foot per month, the region is now ranked fifth among the most costly office markets in APAC. This enduring high rental rate reflects the area’s continued demand for premium office space and its significance within the commercial real estate sector.
Mumbai, with a prime office rental rate of ₹302 per square foot per month, is ranked eighth in APAC for office space costs. The city has witnessed substantial growth in office leasing, with about 3 million square feet leased, marking a significant 183.1% year-over-year increase. This growth highlights Mumbai’s vibrant and expanding office space market.
In contrast, Bengaluru, though a key player in India’s IT sector, ranks 18th among the more affordable office markets in APAC. The city’s prime office rent is ₹137 per square foot per month, reflecting a slight year-over-year increase of 1.3%. Despite this, Bengaluru continues to be a major hub for office transactions, with 4.9 million square feet leased in the second quarter of 2024.
The Knight Frank report reveals a 50% increase in transaction activities across Delhi-NCR, Mumbai, and Bengaluru. This rise is attributed to companies encouraging a return to office environments, which has positively impacted market dynamics. Nevertheless, rental rates for prime office spaces in these cities have remained stable during the April-June 2024 period.
Regional Rental Trends
The report also notes that 15 out of 23 cities tracked saw stable or rising rental rates during the April-June period, an improvement from the 3.2% drop reported in the first quarter of 2024. However, the average prime office rents across APAC experienced a 3.1% decline year-over-year. This decrease is largely due to significant rent reductions in Chinese mainland cities, which saw an annual drop of 10.8%.
Hong Kong SAR continues to hold the title of the most expensive office rental market in APAC, despite an 8.8% decrease in rents during the April-June quarter. The prime office rental rate in Hong Kong SAR stands at $154.76 per square foot per year, maintaining its status as a leading global commercial center.
The outlook for India’s office space market suggests that rental rates will remain stable through the end of 2024. This stability is promising given the overall decline in prime office rents across APAC. Increased global corporate interest in India’s office market underscores the country’s rapid economic growth and its appeal as a business destination.