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Office Rental Values Rise 7% Y-o-Y in Top 7 Cities Despite Tepid Leasing in H1 FY24

Mumbai, December 7, 2023: The fiRst half of fiscal year 2024 remained lacklustre for commercial office space activity across the top 7 cities, with both net absorption and new completions remaining largely stagnant compared to same period last year. New office supply across the top 7 cities rose by a meagre 5% in H1 FY2024 against H1 FY23, and net office absorption saw a marginal yearly decline of 1% in this period.

Prashant Thakur, Regional Director & Head – Research, ANAROCK Group, says, “Interestingly, average rental values across the top 7 cities witnessed a 7% growth in H1 FY24 when compared to the same period in FY23, essentially due to increased construction and input costs. ANAROCK Research data indicates that Grade A office rental values averaged at RS 83 per sq. ft. per month across the top 7 cities in H1 FY2024, while in the corresponding period in FY23, it was approx. RS 77.5 per sq. ft.”

Notably, Chennai witnessed the highest 10% yearly jump in average monthly office rental values – from RS 62 per sq. ft. in H1 FY2024 to approx. RS 68 per sq. ft. in H1 FY2023. Hyderabad came next with an 8% yearly growth. The average monthly office rental value in the city rose from RS 61 per sq. ft. in H1 FY2023 to approx. RS 66 per sq. ft. in H1 FY 2024.

BengaluruPune, and Kolkata each saw 7% annual growth in office rental values in this period, while MMR and NCR registered a 5% jump each.

  • Avg. monthly office rental value in Bengaluru stood at RS 90 per sq. ft. in H1 FY2024, against RS 84 per sq. ft. in H1 FY2023.
  • In Pune, the avg. office rental value stood at RS 74 per sq. ft. in H1 FY2023 while in H1 FY2024, it was RS 79 per sq. ft.
  • Kolkata saw a 7% yearly rise in avg. monthly office rental value in H1 FY24, reaching RS 58 per sq. ft. compared to 54 per sq. ft. in H1 FY2023. The city currently has the most economical office rental values among the top 7 cities.
  • MMR, the most expensive office market in the country, saw monthly avg. office rental value jump from RS 130 per sq. ft. in H1 FY 2023 to RS 136 per sq. ft. in H1 FY2024.
  • In NCR, the avg. office rental value stood at RS 81 per sq. ft. in H1 FY2023 while in H1 FY2024, it stands at RS 85 per sq. ft.
Office Market Rentals (RS/Sq. ft./Month)
CityH1FY23H1FY24% Change
Top 7 Cities78837%

Source: ANAROCK Research

“It was widely anticipated that commercial office space demand in India will see a downturn amid layoffs by several large corporates worldwide, and shrinking business volumes,” says Thakur. “However, despite all headwinds, office activity remained largely unchanged in the fiRst half of FY 2024 as compared to the corresponding period in FY 2023. New completions saw a meagre 5% yearly jump in the period and net absorption dropped by just 1%.”

In terms of sector-wise net absorption, IT/ITeS continues to dominate leasing transactions in H1 FY2024. However, the sector’s overall share in leasing has been on a decline year-on-year. In H1 FY2020, the share of IT/ITeS sector in overall leasing was a whopping 46%, while in H1 FY2024, its share dropped to just 29%.


Consequently, the share of coworking spaces has been on the rise – from 11% in H1 FY2020 to 24% in H1FY2024. This denotes a shift in the leasing trend by many corporates of various sizes who now see flexible workspaces as a viable and more cost-effective option.

Vacancy Rates

Amid increased office space completions, vacancy levels across most top cities rose marginally except in NCR, MMR, and Kolkata. The average vacancy rate of Grade-A offices in the top 7 cities collectively increased by 0.95% – from 15.9% in H1 FY23 to 16.85% in H1 FY24.

An analysis of annual variations in average vacancy rates across the top 7 office markets shows that Pune currently has the lowest at 8.3%. NCR, MMR, and Kolkata witnessed a Y-o-Y reduction in vacancy levels with 0.8%, 0.45%, and 0.1%, respectively. Chennai maintained equilibrium in its vacancy rates throughout the period.

In Pune, Bengaluru, and Hyderabad, office space vacancy levels increased by 0.5%, 0.5%, and 2.6%, respectively over the couRse of the financial year.


Avg. Vacancy Rates across Top 7 Cities
Avg. Vacancy15.90%16.85%

Source: ANAROCK Research


While Indian commercial office space demand doubtlessly faces short-term challenges in the current global environment, the mid-to-long-term outlook remains positive, considering that Grade A offices are still available at sub-dollar rents. Stability in the office market may return from the second half of 2024.

Other Insights

  • Hyderabad has surpassed Bengaluru with the highest influx of new office supply in H1 FY24
  • Bengaluru continues to lead in net office absorption among top 7 cities in H1 FY24
  • The office market share of coworking spaces increased in H1 FY24, with Bengaluru’s share increasing from 23% in H1 FY23 to a remarkable 32% in H1 FY 2024
  • Small-ticket leasing (below 0.05 Mn Sf) dominate office leasing activity with a 53% share across the top 7 cities