Prime office space rentals surge 7% annually: Anarock

Anarock, a real estate consultant, revealed in its India Office Market Update for the first half of the 2023-24 fiscal year (April-September) that prime office space rentals experienced a robust average year-on-year growth of 7 per cent, reaching Rs 83 per square foot per month across seven major cities.

The report highlighted that Grade A office rental values averaged Rs 83 per square foot per month, marking an increase from Rs 77.5 per square foot in the corresponding period last year. The rise was attributed to escalating construction costs, according to Anarock.

Despite a lacklustre performance in commercial office space activity during the first half of the fiscal year in the top seven cities, with net absorption and new completions remaining relatively stagnant compared to the previous year, the average rental values saw a noteworthy growth.

New office supply increased by 5 per cent, while net office absorption witnessed a marginal decline of 1 per cent during the review period.

Prashant Thakur, Anarock Regional Director & Head of Research, noted, "Interestingly, average rental values across the top 7 cities witnessed a 7 per cent growth in H1 FY24, as compared to the same period in FY23, essentially due to increased construction and input costs." 

Among the cities, Chennai experienced the highest year-on-year increase in average monthly office rental values, surging by 10 per cent to Rs 68 per square foot from Rs 62 in the previous year. Hyderabad followed with an 8 per cent increase, reaching Rs 66 from Rs 61 per square foot.

Other major cities, including Bengaluru, Pune, and Kolkata, each observed a 7 per cent annual growth in office rent. Mumbai Metropolitan Region (MMR) and Delhi-NCR registered a 5 per cent increase each.

In specific figures, Bengaluru's average monthly office rental rose to Rs 90 per square foot from Rs 84, Pune saw an increase to Rs 79 from Rs 74 per square foot, and Kolkata observed a rise to Rs 58 per square foot from Rs 54.

MMR, known as the most expensive office market in the country, witnessed a rental increase to Rs 136 per square foot from Rs 130. Meanwhile, in NCR, average office rentals rose to Rs 85 from Rs 81 per square foot. 

(With PTI inputs)