Bengaluru Matches Tokyo with 11.5% Office Rent Growth in Q3 2026

Bengaluru and the National Capital Region (NCR) emerged as leading office rental markets in the Asia-Pacific region during the third quarter of 2026, according to a recent report by Knight Frank. The Bengaluru office market notably recorded an 11.5 percent year-on-year increase in prime office rents, matching the growth rate of Tokyo, one of the world's largest business hubs.

The Asia-Pacific Research, Office Markets – Q3 2026 study, released on Friday, analyzed 24 key cities across the region, including three major Indian markets: Bengaluru, Mumbai, and Delhi-NCR. While Bengaluru and NCR ranked among the top ten for rental growth, Mumbai and Delhi-NCR also showed positive trends with year-on-year increases of 4 percent and 5.4 percent respectively.

Overall, prime office rents across the Asia-Pacific region rose by 1 percent quarter-on-quarter, highlighting steady growth in demand for premium office spaces. Shishir Baijal, International Partner, Chairman and Managing Director at Knight Frank India, commented on the findings, stating, "Rental growth across India’s key office markets reflects the continuing premium placed on quality and location. Bengaluru’s stronger growth highlights the value of well-positioned office assets, while Mumbai and Delhi-NCR reflect the distinct dynamics of more mature business markets." His remarks underscore the importance of strategic location and asset quality in attracting tenants and achieving rental growth.

Breaking down the rental prices, prime office rents in Bengaluru reached ₹2,015 per square foot per annum, while Mumbai and Delhi-NCR posted higher rates of ₹4,111 and ₹4,428 per square foot per annum respectively. Vacancy rates were relatively moderate, with Bengaluru at 13.4 percent, Mumbai at 15.2 percent, and Delhi-NCR at 14.5 percent, indicating healthy demand levels across these markets.

When looking at occupancy costs, Delhi-NCR was the most expensive Indian market, ranking seventh in the Asia-Pacific region with an annual cost of $73.11 (₹6,965) per square foot. Mumbai followed closely behind at eighth place with $68.39 (₹6,514) per square foot annually. Bengaluru offered more affordable office space, with occupancy costs of $37.16 (₹3,539) per square foot per year, positioning it as an attractive option for businesses seeking cost-effective locations without compromising on quality.

The report also highlighted a 13.6 percent year-on-year decline in office leasing activity across the Indian cities within the survey, totaling 7.6 million square feet leased in Q3 2026. Despite this drop in leasing volumes, prime rents still increased by an average of 7.5 percent. This trend suggests a tightening market for high-quality office spaces, where demand remains strong even as overall leasing slows down.

Driving this demand were global capability centers (GCCs), flexible workspace providers, and domestic occupiers, who played a key role in sustaining leasing activity amid weaker interest from traditional third-party IT services companies. These shifts reflect evolving workplace preferences and the growing importance of flexible, strategically located office environments in India’s commercial real estate sector.

The Indian office market’s performance fits within a broader regional context where businesses continue to prioritize quality office environments in prime locations. As companies adapt to hybrid work models and seek spaces that support collaboration and productivity, premium office segments are seeing sustained interest. Bengaluru’s growth, in particular, signals its rising prominence as a technology and innovation hub, attracting a diverse range of tenants.

Knight Frank’s report provides valuable insights into the current trends shaping office markets across Asia-Pacific, offering a detailed look at rental movements, occupancy costs, and leasing patterns. For investors, developers, and occupiers, understanding these dynamics is crucial for making informed decisions in a competitive commercial real estate landscape.