In a notable trend marking the first half of fiscal year 2024, office rental values in the top seven cities of India experienced a substantial growth of 7%, reflecting an upward trajectory from the corresponding period in fiscal year 2023. The increase is attributed to rising construction and input costs, with the average monthly rental value for Grade A office spaces reaching ₹83 per sq ft, compared to ₹77.5 per sq ft in the same period in FY23.
Chennai emerged as the leader in this surge, experiencing a remarkable 10% annual growth in average office rental values. The monthly rental increased from ₹62 per sq ft in H1 FY2024 to around ₹68 per sq ft in H1 FY2023. Following closely, Hyderabad recorded an 8% yearly growth, with the average monthly office rental value in the city increasing from ₹61 per sq ft in H1 FY2023 to approximately ₹66 per sq ft in H1 FY2024.
The overall average rental value for Grade A office spaces across the top seven cities now stands at ₹83 per sq ft per month. This growth trend is attributed to the increase in construction and input costs during the first half of FY2024.
Despite the surge in rental values, the commercial office space activity in these cities during the same period was less than impressive. Both net absorption and new completions showed minimal growth compared to the same period last year. The increase in new office supply across these cities was a mere 5% in H1 FY2024, as opposed to H1 FY23. Additionally, there was a slight yearly decline of 1% in net office absorption during this period.
