Southern Indian cities lead in commercial leasing activity – Anarock Report

Delhi Delhi: The Indian office real estate market has witnessed an unprecedented surge in demand over the past few years, with the year 2024 recording the highest net absorption across the top 7 cities since 2019. According to a report by real estate consultancy firm Anarock, southern cities have outpaced other regions in overall office market activity, including net absorption and new supply growth, over the last six years. In terms of office rentals too, the latest Anarock Research has revealed that cities in the south (Bengaluru, Chennai and Hyderabad) are leading the way with average office rentals expected to increase by up to 26 per cent between 2019 and 2024. Bengaluru leads the way with office rentals increasing by 26 per cent over this period – from Rs 74 per sq ft per month in 2019 to Rs 93 per sq ft per month in 2024, followed by Hyderabad with a 25 per cent increase – from Rs 56 per sq ft in 2019 to Rs 67 per sq ft in 2024 and Chennai with a 26 per cent increase – from Rs 56 per sq ft in 2019 to Rs 67 per sq ft in 2024. With a rise of 20 per cent – from Rs 60 per sq ft in 2019 to Rs 75 per sq ft.

In contrast, the NCR in the north witnessed the lowest average monthly rental growth of 10 per cent during this period – the real estate consultancy firm’s report said that western cities including Pune witnessed a growth of 19 per cent – from Rs 68 per sq ft in 2024 to Rs 81 per sq ft in 2024, while Greater Mumbai witnessed a growth of 13 per cent – from Rs 124 per sq ft in 2019 to Rs 140 per sq ft in 2024. In another observation, Anarock said that despite new supply of over 48.11 million sq ft in 2024 across the top seven cities, office vacancies declined to 16.5 per cent in 2024 compared to 17.8 per cent in 2023. However, compared to 2019 when vacancies across the top 7 cities were the lowest at 13.50 per cent, office vacancies currently remain high. Notably, among the top 7 cities, Chennai had the lowest office vacancies at 9.30 per cent in 2024. Piyush Jain, MD, Commercial Leasing & Advisory, ANAROCK Group, said, “The southern siblings of Bengaluru, Hyderabad and Chennai have witnessed the lion’s share of space absorption. These cities have seen rentals increase by an average of 25 per cent over the last 6 years, while new supply has accounted for 57 per cent; this is due to their strong IT infrastructure ecosystem, with availability of skilled workforce, which has enabled corporates to invest in these cities.”