South India Office Market Sees 26% Rental Growth in 2024

The commercial real estate sector in South India continues to outshine other regions, with Bengaluru, Chennai, and Hyderabad leading office market activity. According to Anarock Research, these cities witnessed up to a 26% rise in average office rentals between 2019 and 2024, driven by a robust IT ecosystem and skilled workforce availability.

Bengaluru Leads South India Office Market Rental Growth

Bengaluru recorded the highest rental increase at 26%, with office rents rising from ₹74 per sq ft per month in 2019 to ₹93 per sq ft in 2024. Hyderabad followed closely with 25% growth, as rentals surged from ₹56 per sq ft to ₹67 per sq ft. Chennai registered a 20% increase, with rates climbing from ₹60 per sq ft in 2019 to ₹75 per sq ft in 2024.

Peush Jain, MD-Commercial Leasing and Advisory at Anarock Group, attributes this growth to South India’s strong IT infrastructure and talent pool, making these cities highly attractive for corporate investments. Notably, South India Office Market accounted for 57% of new office supply over the past six years.

Comparative Office Rental Growth Across Regions

While South India dominated rental growth, other key markets also saw an upward trend:

National Capital Region (NCR): 10% increase (₹78 per sq ft in 2019 to ₹86 per sq ft in 2024)
Pune: 19% rise (₹68 per sq ft to ₹81 per sq ft)
Mumbai Metropolitan Region (MMR): 13% growth (₹124 per sq ft to ₹140 per sq ft)

New Office Supply & Net Absorption Trends

Between 2019 and 2024, a total of 283.21 million sq ft of new office space was added across the top seven cities, with 2022 recording the highest supply addition of 57.75 million sq ft. The South India Office Market alone contributed 172.96 million sq ft, accounting for 61% of the total supply.

In terms of net office absorption, South India Office Market again led the market, comprising 56% of the total 224.18 million sq ft absorbed. Western cities followed with a 25% share, while NCR held 19%. Notably, 2024 saw the highest net absorption of 49.95 million sq ft, with South India Office Market capturing a 55% share.

Declining Office Vacancy Rates

In 2024, new office supply stood at 48.11 million sq ft, while office vacancy rates dropped to 16.5% from 17.8% in 2023. Among the major cities, Chennai recorded the lowest office vacancy rate at just 9.3%, reflecting high demand and market stability.

Conclusion

The South India Office Market has solidified its position as India’s top office market, thanks to consistent rental growth, strong absorption rates, and steady new supply. With Bengaluru, Hyderabad, and Chennai at the forefront, these cities are expected to remain preferred destinations for corporate occupiers and investors in the coming years.

for more updates follow us on instagram