India’s office rentals see 3.6% growth; Pune, Chennai, Bengaluru top performers

India's first commercial property rental index by IIMB and CRE Matrix reveals rental trends across major cities.

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The average effective rentals across major cities in India have grown by 3.6% on a five-year compound annual growth rate (CAGR), according to what is being said to be India’s first commercial property rental index by the Indian Institute of Management Bangalore (IIMB), in collaboration with CRE Matrix.

‘Invest in commercial property for higher returns’

This index, backed by over a decade of transactional data, aims to provide accurate insights into rental trends across India’s ten major cities, covering 90% of Grade A/A+ office stock.

“Traditionally, Indian real estate markets have relied on anecdotal evidence or skewed data from limited transactions. The IIMB-CRE Matrix CPRI addresses these challenges by incorporating a spatiotemporal modelling approach. Unlike conventional indices that focus on average prices, this methodology considers real and hypothetical transactions, predicting current rental prices for active leases. This unique approach ensures a comprehensive and balanced view of the market,” the study states.

The index tracks quarterly effective rental trends since 2012, reflecting normalised values to exclude anomalies like rent-free periods or abnormal escalations. It captures data from Bengaluru, Hyderabad, Mumbai, Gurugram, Pune, Chennai, Noida, Navi Mumbai, Delhi, and Thane, with sub-indices for 36 macro-markets.

The index identifies Pune as the top-performing city with a 12-year CAGR of 6.9%, followed by Chennai and Bengaluru at 5.5% and 5.3%, respectively. Among the macro-markets, Pune’s Central Business District recorded the highest value in Q3 2024.