What is the average commercial rent increase per year?

Hi, the typical commercial rent increase per year in India is in the range of 5 to 8%. But, from what I’ve read recently, the 2022-23 commercial rent in India’s top cities has grown significantly. I like to keep myself updated about the recent trends in the real estate industry as I look to invest in top-performing markets. From my research, the high-street areas in India’s top 8 cities saw a growth in commercial rent by up to 50% last year. If I talk about the shopping malls in these areas, the average rent increase has been 10%. To make things simpler, I am sharing more information about the rental increase in top commercial markets in India below. 

What is the Increase Rate in Commercial Rent in India?

I live in Bengaluru and have been observing the markets here for quite some time. It has become one of the ideal places to invest in because of the ever-increasing demand. Connecting to this, I found out that Bengaluru has seen the highest growth in rent last year. The areas that have seen the rise include Brigade Road, Commercial Street, Indiranagar, Vittal Mallya Road HSR Layout, Koramangala and Jayanagar. Moving to office spaces, Chennai and Delhi NCR saw a rent increase of 2%, while Bengaluru saw a rise of 1%. Lastly, I observed that office leasing in cities like Bengaluru and Hyderabad fell drastically, while Chennai and Delhi-NCR saw positive growth.

This is all I had to share with you related to commercial lease increase per year. I hope this helps.

According to the article I read about real estate consulting firms, rents for commercial and residential buildings in the top 6 to 8 cities have significantly increased. It is because businesses requested their staff to return to the offices. You must be having a question about the average commercial rent. So let me guide you on what is the average commercial rent increase per year.

How much commercial rent increase is legal in India?

The landlord has the authority to collect rent from the renter because they are the property owners. As there is no legal law establishing a restriction on rent, the landlord is free to keep raising the rent fees as he sees fit. Hence, it is wise to include the amount of the increase and the conditions of the increase in the rental agreement itself in such circumstances. The average rent increase per year commercial often goes up by 5% to 8% on a yearly basis.

In order to improve the property's condition, the landlord may temporarily retake possession. However, such improvements to the property should not do the tenant any harm or seriously interfere with his lease. I hope you understood how much is yearly commercial rent increase in India is.

What influences commercial rent?

Rental rates are influenced by a variety of elements, including location, usable space, lease type, market prices and fluctuations, as well as the facilities and property configurations.

The following is a standard, straightforward formula for calculating commercial rent:

Rent = (Usable Square Feet x Monthly Usable Square Feet Rate) + (Common area x the rates per month for this type of area).

So let’s consider a space that is 200 square feet in usable space and 60 square feet in shared space. Consider the monthly rent for the common area is Rs 60 and Rs 250 per square foot, respectively. The following will be the monthly commercial rent as a result:

So the monthly rent will be: Rs 53, 600 (200 x 250 + 60 x 60).

What is the average commercial rent increase per year must be clear to you now.