Office rentals rising steadily in top 10 Indian cities, Pune leads: Report

Office rentals have shown a consistent increase in India's 10 top cities with Pune emerging as the leader with a compound annual growth rate of 6.9 per cent over the last 12 years, according to a commercial property rental index launched by the Indian Institute of Management-Bangalore (IIM-Bangalore) in collaboration with CRE Matrix.

The first edition of the index focuses on Grade A/A office assets of the top 10 Indian cities - Bengaluru, Hyderabad, Mumbai, Gurugram, Pune, Chennai, Noida, Navi Mumbai, Delhi and Thane, which covers 90 per cent of India's Grade A/A office stock. Indices for 36 macro-markets from each of these cities have also been recorded.

According to the report, in the last 12 years, IIMB-CRE Matrix CPRI was recorded for 10 cities across 50 quarters. In 74 per cent of instances, the index witnessed an increase on a Q-o-Q basis. Post-pandemic, since Q2 2022, 92 per cent of Index instances witnessed an increase on a Q-o-Q basis.

As many as four out of eight quarters saw an increase in IIMB-CRE Matrix CPRI for all 10 cities, a trend seen never before in the history of the Indian office market, while 4/10 cities saw an increase of more than 5 per cent in the 12-Year CAGR of IIMB-CRE Matrix CPRI, the report said.

It highlights that Bengaluru saw a positive rent growth in 44 out of 50 instances of Growth in IIMB-CRE Matrix CPRI, the highest across all cities.

The inaugural index, known as the IIMB-Cre Matrix Commercial Property Rental Index (CPRI), was unveiled at IIM Bangalore, in the presence of IIMB Director Prof.?Rishikesha T Krishnan.

Developed under the guidance of Prof Venkatesh Panchapagesan, Finance and Accounting area, and Prof Soudeep Deb, Decision Sciences area, by IIMB doctoral student Kapil Gupta, the index covers Grade A and A rentals across 10 cities from Q1 2012 to Q3 2024.

Updated quarterly, it offers granular insights into both micro and macro-markets, with plans to expand into other categories, including green leasing, Grade B and C properties, and warehousing.