Whalesbook
Market Tightens as Supply Falls Behind Demand
Supply constraints in India's key office markets are now significantly outpacing demand, pushing prime rents in Bengaluru and Delhi-NCR past the ₹100 per square foot monthly threshold for the first time. This unprecedented surge highlights a widening gap between what tenants need and what's available.
Steady Rental Growth Continues
Knight Frank noted that supply constraints in key markets have driven rental growth since early 2022. In Q1 2026, rents grew between 2% and 15% year-on-year across eight major cities. Delhi-NCR's average rent rose 15% annually to ₹105 per sq ft, while Bengaluru's increased 7% to ₹100.6 per sq ft.
Demand Outpaces New Supply
Office space leasing reached 29.9 million square feet in Q1 2026, up 6% from the previous year. However, only 14 million sq ft of new office space was delivered across the eight cities, less than half of what was leased. This gap, seen since 2021, has tightened market conditions.
Developer Shift Shrinks Vacancy
This imbalance is worsened by developers focusing more on residential projects. Vacancy rates have dropped significantly, from 17.2% in 2021 to 13.9% in Q1 2026. This scarcity benefits property owners and developers such as DLF Ltd, Embassy Office Parks REIT, and Mindspace Business Parks REIT.