Cities That Made A Mark For High Rental Growth In 2016

Cities That Made A Mark For High Rental Growth In 2016

Cities That Made A Mark For High Rental Growth In 2016

Where there has been visible change in the sale and purchase of real estate, the new policies and the demonetisation doesn't seem to have any major effect on the rental market. The year 2016 has seen a considerable increase in the office rental market. There has been an increase of nine per cent on quarterly basis and 14 per cent increase in yearly basis. The total office space at prime locations in major cities taken for rent is approximately 28 million square feet. The demand for the key office space is 11 million square feet approximately, in the period of July – September, which means it is a record 10 quarter high as compared to last year 2015. The demand for office rental was led by the Silicon Valley, Bengaluru with 24 per cent followed by Hyderabad 17 per cent, Mumbai 16 per cent, Chennai 16 per cent and Pune contributing 13 per cent. Going by sector wise demand for office rentals, the   IT/ITeS firms led office transaction activity, by 54 per cent. Apart from these sectors, BFSI and Engineering & Manufacturing also drove up the demand for the office space. The office rental growth has turned towards smaller markets like Chennai, Hyderabad and Pune, while the bigger markets like Bengaluru still continue to lead. We bring you some of the major cities that have grossed highly in the rental market.


The Silicon Valley of India remained in high demand for office rentals. The Central Business District (CBD) was in high demand due to the presence of major corporate companies like, Google, Infosys, HP, TCS, etc. which occupy large spaces. The demand for the rentals was driven by the IT/ ITeS sector. The total office space rented in a single quarter in 2016 was 6.1 million sq. ft. which is equal to the total space rented in the year 2015.


The Central Business District of Chennai has shown 10 per cent rise in the rental. Teynampet and Greams Road were the most preferred localities in Chennai across various sectors like IT /ITes, Banking Financial services and Insurance (BFSI). But the major office rentals has been taken by the IT/ITeS sector.

Delhi NCR

Delhi NCR has seen an increase of four per cent. The micro markets in Gurgaon like, Cyber City, DLF and Race Course, have continuously been attracting major players for the office rentals. The low vacancy rates and good infrastructure, has been in high demand in the micro market. There has been huge demand among the consultancy and e-commerce companies, like OYO Rooms, Urban Clap, McKinsey and Betchel.


The highest growth was registered by Cyberabad, Hyderabad, registering an increase of transactions from 1.5 million sq ft. to 2.8 million sq ft. in the first half of 2016, which meant a rise of 91 per cent on an year on year basis. The high demand of office space has been on the rise due to the incentives offered to the IT and ITeS companies by the state government and the well- developed infrastructure along with the talented work force, also the large office campuses and the comparatively low rentals have contributed to the sharp rise in rental transactions. Hyderabad secondary business district, which includes locations like Madhapur, HITEC City, Nanakramguda, Gachibowli and the Financial Districts have been in demand.


The micro markets in Pune have also shown considerable rise in the rental market. These include two Special Economic Zones (SEZ), Fursungi IT park, Kharadi, Hinjewadi, Senapati Bapat Marg. All these localities are upcoming and booming IT hub. The low vacancy in the grade A structures also added to the increase in demand of the office space, which has resulted in an 11 per cent escalation of the rental, despite the fall in the number of deals, with the IT sectors leading the transactions. The major share has been claimed by IT giant, Infosys.

Last Updated: Thu Jan 12 2017

Similar articles

@@Fri Jul 05 2019 13:15:19