Are India's Office Rents Rising? Effective Rates Up 3.8% YoY in Q2CY25
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Synopsis
A recent study reveals that effective office rents in India have surged by 3.8% year-on-year in Q2CY25. Discover how cities like Mumbai, Gurugram, and Delhi are shaping the commercial property landscape amidst evolving tenant demands.
Key Takeaways
- Effective rents for Grade A and A+ office spaces increased by 3.8% YoY in Q2CY25.
- Mumbai leads in quarterly rental growth with 3.6% QoQ.
- Delhi shows an annual growth of 16.4% YoY.
- Gurugram and Navi Mumbai also demonstrate strong market performance.
- The focus on effective rents provides a more accurate picture of market conditions.
New Delhi, Oct 23 (NationPress) A recent report indicates that effective rents for Grade A and A+ office spaces in India have increased by 3.8 percent year-over-year during the second quarter of 2025.
Mumbai topped the ranking among Indian cities, showcasing the highest quarterly rental growth of 3.6 percent quarter-on-quarter, as per the quarterly Commercial Property Rental Index compiled by the Indian Institute of Management Bangalore and CRE Matrix.
Gurugram and Delhi also emerged as significant markets within India's major urban centers.
Delhi experienced the most substantial annual growth, with rents surging 16.4 percent year-on-year, underscoring the premium associated with the limited availability of high-quality office spaces in the city, the report highlighted.
Gurugram noted a 3.2 percent increase quarter-over-quarter and an 8.1 percent rise over the last year. Meanwhile, Navi Mumbai achieved the highest three-year compound annual growth rate at 9 percent, establishing it as India’s most resilient office market post-COVID.
In Chennai, the northern suburbs led the quarterly growth with a remarkable 9.8 percent increase, while Bengaluru's Whitefield area saw an 8 percent growth quarter-on-quarter, maintaining the highest rental index value at 243.
According to Abhishek Kiran Gupta, CEO and Co-founder of CRE Matrix, the significant quarterly increase in Bengaluru’s Whitefield and Chennai’s northern suburbs indicates that tenant demand is extending beyond traditional Central Business Districts (CBDs).
Over the past five years, Navi Mumbai's Central Business District demonstrated a remarkable 9.6 percent CAGR, the institute noted.
“We anticipate that the CPRI will serve as a crucial benchmark not only for landlords and tenants but also for investors in REITs,” stated Prof. Venkatesh Panchapagesan, Chairperson of the Real Estate Research Initiative (RERI) and a faculty member in the Finance & Accounting area at IIMB.
Unlike traditional price-based indices that depend on headline rents, the IIMB-CRE Matrix CPRI emphasizes effective rents, which take into account variations in lease terms such as rent-free periods, unusual security deposits, complimentary parking, and escalation clauses, the report concluded.
Point of View
It's crucial to acknowledge the ongoing transformation in India's office rental market. The steady rise in effective rents reflects a robust demand for Grade A and A+ office spaces, signaling a recovering economy. The data from IIMB and CRE Matrix emphasizes the need for stakeholders to adapt to shifting market dynamics, ensuring informed decisions in real estate investments.
NationPress
23/10/2025
Frequently Asked Questions
What is the effective rent growth for Grade A offices in India?
Effective rents for Grade A and A+ office spaces in India rose by 3.8% year-on-year in Q2CY25.
Which city showed the highest rental growth?
Mumbai exhibited the highest quarterly rental growth of 3.6% quarter-on-quarter.
How did Delhi perform in terms of annual rent growth?
Delhi experienced an impressive annual rent growth of 16.4% year-on-year.
What trends are being observed in office space demand?
There's a notable demand shift to areas beyond traditional CBDs, particularly in Bengaluru’s Whitefield and Chennai’s northern suburbs.
What makes Navi Mumbai's office market resilient?
Navi Mumbai achieved the highest three-year compound annual growth rate at 9%, making it a resilient office market post-COVID.
