The Delhi-National Capital Region (NCR) office market has experienced significant growth in 2024, recording a 61% year-on-year increase in net office absorption, reaching 9.5 million square feet. This marks the highest absorption rate among the top seven cities in India, according to a report released on Thursday.
Strong Demand Boosts Office Absorption
Overall, net office absorption across the top seven cities in India reached nearly 50 million square feet, a 29% increase from 38.64 million square feet in 2023. This growth was mainly driven by Global Capability Centres (GCCs) and the technology sector, highlighting the increasing demand for high-quality office spaces.
Co-Working Gains Popularity, IT Sector Share Declines
The co-working sector accounted for 34% of total office transactions, marking a 6% rise compared to 2023. However, the IT-ITeS sector saw a 3% decline, contributing 29% to total office space transactions. Meanwhile, consulting businesses occupied 12% of the total leased office space.
According to Peush Jain, Managing Director of Commercial Leasing and Advisory at Anarock Group, 2024 has been a transformative year for India’s office real estate market. He noted that strong rental growth and strategic expansions across different sectors have contributed to this trend.
New Office Supply Declines, Vacancy Rates Improve
While demand for office space grew, the number of new office completions in NCR declined by 22% to 5.9 million square feet in 2024, compared to 7.6 million square feet in 2023.
This controlled supply addition, combined with strong demand, resulted in a 2.6% drop in vacancy rates, bringing them down to 22.6%. Despite this improvement, NCR continues to have relatively higher vacancy rates compared to other major office markets in India.
Rental Rates on the Rise
The report also highlighted a 5% year-on-year increase in average office rental rates, bringing them to ₹86 per square foot per month. Since 2019, office rents in NCR have grown steadily by 10%.
Among the key micro-markets, Noida emerged as the most dynamic, with a 6% annual rental growth. However, it remains the most affordable market, with rental prices ranging between ₹60-130 per square foot per month.
The Delhi-NCR office market continues to show strong growth, with increasing demand from global and domestic businesses. The combination of rising rentals, reduced vacancy rates, and controlled new supply indicates a strengthening real estate sector in the region.
