In the first half of fiscal year 2024 (FY24), the average monthly rental value for Grade A office spaces across India’s top 7 cities rose to ₹83 per square foot, a jump from ₹77.5 in the same period last year (FY23). This 7% growth was primarily due to higher construction costs.
City-wise Changes
- Chennai experienced the highest increase, with a 10% rise, reaching ₹68 per sq. ft. from ₹62 in FY23.
- Hyderabad followed with an 8% growth, climbing from ₹61 per sq. ft. to ₹66 in FY24.
According to Prashant Thakur, from ANAROCK Group, there was minimal change in office space activity compared to FY23, with a 5% increase in new office supply and a 1% decline in net office absorption.
Rental Value Changes by City
- Bengaluru, Pune, and Kolkata saw a 7% annual increase.
- Mumbai (MMR) and Delhi NCR had a 5% rise each.
- Bengaluru stood at ₹90 per sq. ft., up from ₹84 in FY23, while Pune rose to ₹79 per sq. ft. from ₹74.
- Kolkata had the most economical values, rising from ₹54 to ₹58 per sq. ft.
- MMR increased from ₹130 to ₹136 per sq. ft., and Delhi NCR rose from ₹81 to ₹85 per sq. ft.
The IT/ITeS sector still dominates office leasing but has decreased from 46% in FY20 to 29% in FY24. Meanwhile, coworking spaces’ share increased from 11% to 24%, signifying a shift in leasing preferences.
Vacancy Levels
- Vacancy rates slightly increased overall to 16.85% in FY24 from 15.9% in FY23, except in NCR, MMR, and Kolkata.
- Pune currently has the lowest vacancy rate at 8.3%.
- NCR, MMR, and Kolkata observed reduced vacancy rates, while Chennai remained stable. Other cities experienced marginal increases.
Despite global economic challenges, the Indian office market seems resilient, with prospects of stability returning by the latter half of 2024.
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(Credits: Hindustan Times)