Indian Office Rental Market Trends: Insights from Knight Frank’s APAC Index Q3 2024

A New Era in India's Office Rental Landscape. India’s major office rental markets—Delhi-NCR, Mumbai, and Bengaluru—are witnessing transformative dynamics, as detailed in Knight Frank’s Asia-Pacific Prime Office Rental Index Q3 2024. This latest report highlights the region's resilience and growing global appeal for corporate occupiers.

Steady Trends in Delhi-NCR: Sixth Most Expensive in APAC

Delhi-NCR, a critical hub for business and innovation, continues to hold steady, maintaining prime office rents at Rs 340/sqft/month. Over the past four quarters, rental values in this region have been stable, solidifying its position as the 6th most expensive office market in the APAC region. The consistency underscores its robust appeal, driven by its strategic connectivity and thriving economic ecosystem.

Mumbai: India’s Financial Powerhouse

Mumbai, the financial capital of India, recorded a prime office rent of Rs 317/sqft/month, placing it as the 8th most expensive commercial market in APAC. Strong occupier demand and limited supply have driven a 5% year-over-year (YoY) increase in rental values. Mumbai remains a magnet for businesses with a primary focus on the Indian market, reaffirming its critical role in the nation’s economy.

Bengaluru: The GCC Hub with Record Growth

Bengaluru, known as India’s Global Capability Centre (GCC) hub, saw a remarkable 158% YoY growth in transaction volumes in Q3 2024. This robust growth highlights its importance as a global innovation hub. Despite its prime office rent being lower at Rs 138/sqft/month, Bengaluru ranks as the 18th least expensive in APAC. Its affordability, coupled with a high concentration of GCCs—accounting for 62% of the city's traded space—makes it an attractive market for multinational corporations.

Growth Drivers and Future Outlook

The combined transaction volumes across Delhi-NCR, Mumbai, and Bengaluru hit consecutive all-time highs in Q2 and Q3 2024, driven by two key sectors: Global Capability Centres (GCCs) and India-Focused Businesses. This demand is supported by India's strong economic fundamentals, a vast talent pool, and favorable business policies.

Knight Frank projects rental stability across these markets over the next 12 months, with physical occupancy rates remaining consistent since 2022.

Global Trends and APAC Dynamics

The report highlighted that 16 out of 23 monitored cities in APAC experienced stable or increasing rental values YoY. While Hong Kong SAR retained its top spot as the most expensive market, Delhi-NCR, Mumbai, and Bengaluru stood out for their sustained resilience.

Brisbane, notably, recorded the highest YoY growth, reflecting a growing trend of flight-to-quality properties in the region. Despite soft market conditions, occupiers are leveraging broader choices to secure favorable lease terms.

Expert Insights

Shishir Baijal, Chairman and Managing Director of Knight Frank India, emphasized, “The resilience of the Indian economy continues to attract strong global corporate interest. Quarterly transaction volumes have reached record highs, supported by steady rental rates and increasing demand.” Similarly, Tim Armstrong, Global Head of Occupier Strategy and Solutions, stated, “Vacancy rates in the region are stabilizing, and occupiers are seizing opportunities for quality spaces during the ongoing expansionary cycle.”