Gurgaon, February, 07, 2018 – Despite the uncertainties caused by various policy initiatives, demand for Grade A office space maintained its pace by recording a pan-India leasing volume of 42.8 million sq ft in 2017. The consistent demand reflected its impact in the rental values of active office micromarkets across Indian cities. Colliers Research database indicates that the IT-ITeS cities, Bengaluru and Pune witnessed maximum traction in terms of rental increase with five micromarkets from Bengaluru and three micromarkets from Pune, that made it to the top 10 office markets in 2017.

“With the advent of all the government policies, the real estate sector is formalizing itself, and we anticipate robust supply pipelines to quench the growing demand. However, the rents in micromarkets with high demand and no visible ready stock are set to increase in the upcoming years” says Ritesh Sachdev, Senior Executive Director, Occupier Services, Colliers International. 

The top 10 office micromarkets that witnessed the highest rental growth in 2017 are:

Bengaluru – CBD

CBD micromarket in Bengaluru witnessed the maximum rental jump of 25% YOY which can be attributed to its centralized location, increasing demand and low availability of ready to occupy Grade A space. Total leasing activity in CBD in 2017 was recorded at 1.4 million sq ft, contributing to 9% share in total leasing volume.

Bengaluru – Bannerghatta Road

With limited availability of vacant stock and lack of upcoming supply, the rental rates in Bannerghatta Road increased by 18% YOY.  This micromarket enticed the interests of occupiers from IT-ITeS sector and coworking operators in 2017.

Bengaluru – Electronic City

Electronic city in Bengaluru recorded an increase of 17.6% YOY in 2017. The growing occupier interest in this micromarket is due to readiness of quality Grade A spaces at competitive rents and availability of large floor plates. This micromarket attracted few large deals in 2017 such as Siemens and Syngen International.

Delhi – Aerocity

As a direct outcome of preference among occupiers, Aerocity micromarket recorded a 17% YOY increase in rents. We expect Aerocity to remain as a preferred micromarket among occupiers' due to its locational advantages and availability of Grade A stock. DIAL (Delhi International Airport Limited) has started allocating land parcels in phase II of Aerocity for mixed-use development. However, it will take at least three to five years for new building to materialize. Hence, in our opinion, rents should rise by a further 8-10% in 2018 due to the lack of a visible supply pipeline over the next three years

Pune – Kharadi

One of the fastest growing micromarket Kharadi in Pune witnessed a rental growth of 14.6% in 2017. With significant upcoming supply under various stages of construction in this micromarket, we expect the Kharadi to continue to be an active micromarket in 2018 and the supply should be followed by demand due to the availability of large talent pool.

Pune – Hadapsar/Fursungi

Hadapsar market is emerging due to few notable projects such as Magarpatta city and other projects offering large floor plates. This micromarket being an IT-ITeS destination with active residential catchment nearby, observed a 12.6% YOY growth in office rents.

Bengaluru – EPIP/Whitefield

Owing to low vacancy rate and shortage in supply, EPIP/Whitefield micromarket witnessed a rental increase of 11% YOY. However, we expect that the rents should stabilize over upcoming quarters considering the robust pipeline of Grade A supply.

Chennai – OMR Pre-Toll

OMR Pre-Toll micromarket in Chennai witnessed a raise in rental values to about 10.8% YOY in 2017. Regardless of increasing rents, this micromarket continued to garner maximum occupier interest representing 32% of the total transaction volume in the city. In our opinion, considering the shrinking vacancy rates coupled with rising rents in OMR pre-toll, occupiers' focus is likely to shift towards OMR post-toll over next 3 years due to the significant supply pipeline

Pune - Aundh

Aundh micromarket in Pune saw a 9.6% YOY increase in rents in 2017. With spaces taken up my various IT-ITeS and manufacturing companies, we expect this micromarket to be one of the key developing micromarkets of Pune in 2018.

Bengaluru – Outer Ring Road

The most sought-after office destination in Bengaluru, Outer Ring Road furnished maximum volume of absorption of 46% in 2017. Due to the ever-increasing demand and low vacancy, this micromarket witnessed a rental increase of 9.4%.


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