Delhi-NCR’s prime office market continues to see rental rates maintain levels seen in the last four quarters.
Knight Frank, in its latest edition of the Asia-Pacific Prime Office Rental Index for Q3 2024, cited that Delhi-NCR is the 6th most expensive office space rental market in the entire APAC region. Hong Kong SAR was APAC’s most expensive office market during the quarter.
Prime rents in NCR remained stable in Q3 2024, while Mumbai and Bengaluru saw year-on-year (YoY) increases of 5% and 3%, respectively, driven by strong occupier demand and limited new supply.
In Q2 and Q3 2024, the combined transaction volumes in these three markets reached a sustained all-time high. This growth is largely attributed to two key areas: Global Competency Centers (GCCs) and India-focused businesses. The surge reflects optimism about India’s economic future, its rich talent pool, business-friendly regulations and the continued growth of its vast consumer markets.
In Q3 2024, Bengaluru saw the largest volume growth, at 158% YoY. Bengaluru’s status as a GCC hub was further supported by the fact that 62% of the space traded in the city was from the GCC. Most of the business volume of Mumbai and NCR was made up of companies dealing with India.
Prime office rents in Delhi-NCR, Mumbai and Bengaluru have remained strong year-on-year and rental rates are expected to remain stable over the next 12 months. Overall, 16 of the 23 monitored cities reported stable or year-over-year rent increases, up from 15 in Q2 2024.
Notably, Brisbane recorded the highest year-on-year growth in Q3 2024, reflecting positive trends in many markets. The region-wide stabilization vacancy rate decreased marginally by 0.2 percentage points.
Shishir Baijal, Chairman and Managing Director, Knight Frank India said, “The resilience of the Indian economy continues to attract strong global corporate interest, which is reflected in continued demand in India’s key office markets. Quarterly transaction volumes have reached record highs and are likely to surpass the annual benchmark in 2024, while rental rates remain stable. This positive outlook, supported by continued physical occupancy, stable rental levels from 2022 and growing demand in 2024, underlines our confidence in the continued strength of the Indian office market in the near to medium term.”
Asia Pacific Prime Office Rent (Q3 2024)
Delhi-NCR
Delhi-NCR’s prime office market continues to see rental rates maintain levels seen in the last four quarters. Prime office rent in the city is Rs. 340/sqft/month, making it the 6th most expensive office market in the APAC region.
Mumbai
Prime office rent in the city is Rs. 317/sqft/month and was the 8th most expensive commercial market in the APAC region.
Bengaluru
Bengaluru ranks 18th on the list and is one of the least expensive prime office markets in the APAC region. Prime office rent in the city is Rs. 138/sqft/month was recorded. Rent prices in the city are projected to remain stable over the next 12 months.
Tim Armstrong, Global Head of Occupier Strategy and Solutions said, “Despite rising vacancies in the region, rent declines stabilized in the third quarter, supported by a trend in favor of flight-to-quality properties. Overall, the current expansion cycle in the region allows occupiers to consider a wider range of options and strategies, increasing their ability to secure favorable lease terms in the current soft conditions.”
Asia-Pacific prime office sector poised to remain tenant-friendly in 2024. With an ample supply pipeline, landlords have had to adopt flexible strategies to sustain occupancy levels. After delivery of more than 12 million sq m of office space in 2024, the supply pipeline is expected to decline by about one-fifth for 2025.
While availability in the region is expected to decrease, it will be gradual. However, increased leasing activity could quickly tighten the availability of prime space, reinforcing the ongoing trend of flight-to-quality as tenants seek to secure premium locations that meet their evolving workspace needs.