New Delhi, 8th August 2025: Despite recording a robust absorption of 18.9 Mn sq ft in H1 2025, average rental values across the top seven cities remained largely stable, ranging between INR 18–31/sq ft/month. Pune holds the highest rental of INR 31/sq ft/month, driven by strong demand from 3PL, automotive, engineering, and manufacturing sectors. The city recorded a significant 34% increase on a half-yearly basis and 13% year-on-year, driven primarily by high-value transactions in key submarkets like Khed and Chakan. Limited availability of land has led to an increase in land prices, further pushing up overall transaction values.
On the other hand, Mumbai witnessed the lowest rentals of INR 18/sq ft/month amongst the top seven cities. While the rentals increased by 2% in H1 2025 compared to H2 2024, they declined by 2% over the same period a year ago. The overall stability in rentals can be attributed to balanced demand-supply dynamics supported by fresh supply additions.
Rentals in Hyderabad remained steady at INR 19/sq ft/month in H1 2025, with a modest annual increase of 1%. Conversely, Bengaluru recorded an annual decline of 5% despite a significant increase in demand, reaching INR 19/sq ft/month. Rentals in Chennai stood at INR 25/sq ft/month in H1 2025, witnessing a half-yearly increase of 3% and an annual rise of 2%.
Rentals in the NCR region contracted significantly by 10% annually and 4% over H2 2024, reaching INR 21/sq ft/month in H1 2025. This decline could be attributed to a large share of leasing, around 60%, recorded at rates below the city’s average rent.
Rental value in Kolkata is at INR 21/sq ft/month, showcasing a muted half-yearly decline of 1% but an annual growth of 8%, despite limited absorption activities.
City-wise Rental Values
|
City |
Weighted Average Rental Values (INR/sq ft/month) |
H1 2025 vs H2 2024 (% Change) |
H1 2025 vs H1 2024 (% Change) |
|
Bengaluru |
19 |
NIL |
-5% |
|
Chennai |
25 |
3% |
2% |
|
Hyderabad |
19 |
2% |
1% |
|
Pune |
31 |
34% |
13% |
|
Mumbai |
18 |
2% |
-2% |
|
Kolkata |
21 |
-1% |
8% |
|
NCR |
21 |
-4% |
-10% |
Source: Vestian Research
Despite a significant growth in absorption and rentals, investments dropped sharply to USD 32 Mn in H1 2025, marking a steep 98% annual decline. Its share in total investments also reduced from 42% in H1 2024 to a mere 1%. This substantial downturn indicates a combination of factors influencing investor sentiment, including a strategic shift toward asset-light models, cautious investor behaviour amid global economic uncertainties, and rising operational costs.
Institutional Investments
|
Period |
Institutional Investments (USD Mn) |
% Share of Total Investments in RE |
|
H1 2025 |
32 |
1% |
|
H2 2024 |
399 |
13% |
|
H1 2024 |
1,559 |
42% |
Source: Vestian Research
Shrinivas Rao, FRICS, CEO, Vestian, said, “While the first half of 2025 witnessed a dip in investments, strong demand across key markets, the expansion of multimodal logistics infrastructure, and an emphasis on sustainable and tech-enabled solutions signal long-term growth. Strategic initiatives under the Gati Shakti plan and increasing traction in tier-2 and tier-3 cities are expected to drive the next wave of growth in the sector.”