New Delhi [India], February 14 (ANI): The Indian office real estate market has seen a phenomenal rise in demand in the last few years with the year 2024 recording the highest net absorption across the top 7 cities since 2019.

As per a report from real estate consultancy firm Anarock, the Southern cities have outshone other regions in overall office market activity including net absorption and new supply addition over the past six years.

In terms of office rentals too, the latest ANAROCK Research revealed that the South cities (Bengaluru, Chennai and Hyderabad) lead with up to 26 per cent rise in average office rentals between 2019 and 2024.

Bengaluru leads with a 26 per cent rise in office rentals in the period - from Rs 74 per sq. ft. per month in 2019 to Rs 93 per sq. ft. per month in 2024, followed by Hyderabad with 25 per cent growth - from Rs 56 per sq. ft. in 2019 to Rs 67 per sq. ft. in 2024 and Chennai with 20 per cent rise - from Rs 60 per sq. ft. in 2019 to Rs 75 per sq. ft.

In contrast, NCR in the North saw least average monthly rental growth of 10 per cent in the period - from Rs 78 per sq. ft. per month in 2019 to Rs 86 per sq. ft. in 2024.

Western cities including Pune saw 19 per cent growth - from Rs 68 per sq. ft. to Rs 81 per sq. ft. in 2024 while greater Mumbai saw 13 per cent growth - from Rs 124 per sq. ft. in 2019 to Rs 140 per sq. ft. in 2024, the real estate consultancy firm report said.

In another observation, Anarock noted office vacancies dropped to 16.5 per cent in 2024 as against 17.8 per cent in 2023, despite the massive new supply addition of over 48.11 mn sq. ft. in 2024 across the top seven cities.

However, in comparison to 2019 when vacancies in the top 7 cities stood the lowest at 13.50 per cent, the office vacancies continue to be higher presently. Notably, among the top 7 cities, Chennai had the least office vacancy of 9.30 per cent in 2024.

Peush Jain, MD-Commercial Leasing and Advisory, ANAROCK Group said, 'The Southern siblings of Bengaluru, Hyderabad and Chennai has seen the lions' share of space absorption. These cities have had an average growth of 25 per cent in rentals over the last 6 years with 57 per cent share in new supply; is due to its robust IT infrastructure ecosystem with availability of skilled workforce that has enabled corporations to invest in these cities.'

'Driven by strong demand primarily from the technology sector and flex spaces, most key markets would see sustained office space demand in next 6-8 quarters,' Jain added.

'As India continues to be one of the fastest growing economies, global corporates will look to establish their GCCs for expansion. The start-up ecosystem has again gained momentum and they too will be major drivers of office demand alongside the BFSI sector.' (ANI)