Top 7 Indian cities register 4-8% office leasing growth, outperform global markets: Report

NEW DELHI: Despite persistent global headwinds in rental and leasing activity, Indian cities have outpaced the major global centres, with top seven hubs witnessing a growth of 4 to 8 per cent, according to a report by real estate services firm Vestian.

According to the report, rental growth in India's national capital Delhi registered an uptick of 8.2 per cent, while financial capital Mumbai saw rental growth of 6.7 per cent.

In stark contrast to major global cities like New York, Seattle, Boston, Hong Kong, and Shanghai, which have witnessed rental declines over the last five years, India witnessed a steady upward movement.

New York's rental market growth in 2024 compared to 2023 stood negative, registering a 1.3 per cent rental decline. Meanwhile, Seattle and Hong Kong also registered negative rental growth of 1.9 per cent and 6.0 per cent, respectively. China's major business hub Shanghai also registered a degrowth of 6.8 per cent.

Meanwhile, Mumbai, Delhi, and Bengaluru registered rental growth of 6.7 per cent, 8.2 per cent, and 4.7 per cent in 2024, respectively, compared to the previous year.

Notably, while some Western markets, such as London and Miami, posted increases of 31 per cent and 53 per cent, respectively, the broader global sentiment reflects a slowdown due to rising vacancy rates and rapidly changing workplace strategies.

Shrinivas Rao, CEO of Vestian, affirms that the decline in office space rents in the global market is influenced by the emergence of technologies like generative AI, as well as changes in office space utilization strategies. T

Furthermore, in 2024 alone, rental rates in Indian cities surged between 3.8 per cent and 8.2 per cent compared to the previous year.

India remains resilient, driven by strong demand from the IT sector and Global Capability Centers (GCCs), Rao added.

While global cities continue to see demand for premium office spaces, India's affordability and expansion-driven leasing set it apart. As a cost-effective hub, India is poised for steady growth, the report added.

Talking about the rental trends in India, Rao further stated that the influx of new businesses and company expansions has led to significant demand for office spaces in India.

He further added that global firms are aggressively seeking office space in India due to its robust economic growth compared to other major economies, rich demographic dividend, large consumer base, rapid urbanization, and the easy availability of a skilled workforce at competitive rates, particularly in technology and finance.

Prime commercial hubs like Mumbai's BKC and Delhi's central business district (Connaught Place and adjoining area) command high rentals, with average rent reaching USD 3-4 per square foot a month.

Strong economic activities, upcoming mega infrastructure projects, and the expansion of Global Capability Centers (GCCs) continue to drive rental appreciation across the major cities of India.

While global office rental markets continue to face headwinds, India's office sector is bucking the trend with sustained growth in office leasing and rentals, the report highlighted.