Jaipur is set to add 6.62 million square feet of commercial space by 2028, targeting offices, warehouses, and malls. While the expansion highlights the city's growing appeal for IT and logistics firms, investors should note that double-digit vacancy rates currently persist across all property types, which could impact rental growth.
Jaipur is preparing for a major expansion of its commercial real estate footprint. A new projection indicates that the city will add 6.62 million square feet of office, retail, and warehousing space by 2028. This move is part of a larger trend where companies are moving to Tier-II cities to reduce operating costs while maintaining access to infrastructure. The city is attempting to position itself as a strategic node, particularly given its proximity to the Delhi-NCR region.
The planned expansion includes 3.32 million square feet of office space, 2.4 million square feet for warehousing, and 900,000 square feet for retail malls. Currently, Jaipur has an existing office stock of 9.7 million square feet, with monthly rentals reaching ₹95 per square foot. Major IT players, including Wipro and Infosys, have already established a presence in the region, largely within the Mahindra SEZ, which helps validate the city's potential for corporate growth.
However, the primary concern for investors is the current demand-supply balance. Market data reveals that double-digit vacancy rates exist across all key segments. The office sector is dealing with a 24% vacancy rate, while warehousing and retail sectors report 22% and 16% vacancy rates, respectively. Adding new supply while these segments are not fully occupied suggests that absorption will need to increase significantly for these projects to be profitable. If demand does not keep pace with the construction pipeline, it could put pressure on rental rates and developer margins.
Logistics is a key area of focus, with new developments concentrating along the NH-11 and NH-48 corridors. These highways provide a strategic link for companies looking to manage supply chains for the broader northern region. In the retail sector, developers are pushing ahead with new mall projects despite the existing supply of 4.9 million square feet across 12 operational malls. Prime retail rentals have been observed at approximately ₹280 per square foot.
For investors and market watchers, the crucial factor to monitor will be the pace of space absorption over the next few years. The success of this expansion depends on whether the city can attract enough businesses to fill the new capacity. If the vacancy levels remain high as the new supply hits the market, it could signal an oversupply issue, potentially tempering the outlook for commercial real estate developers operating in the region. Tracking quarterly rental trends and occupancy levels will provide a clearer picture of whether the market is maturing or becoming crowded.