India’s Office Market 2025: Demand Outpaces Supply for Sixth Straight Quarter

India’s commercial real estate market continues its strong upward trajectory in 2025. According to Nuvama Institutional Equities’ latest “Hot Property” report, office space leasing outpaced supply for the sixth consecutive quarter, signaling robust business expansion and global investor confidence in India’s commercial property sector.

Net leasing rose 31% year-on-year in Q3 2025 to 15.9 million sq. ft., while new completions increased 44% YoY to 13.6 million sq. ft. Despite this, demand still surpassed supply, driving overall vacancy rates down to 14.2%, the lowest since 2019.

Developers Enjoy Strong Pricing Power

The persistent demand-supply imbalance has strengthened pricing power for developers and landlords. Gross leasing volumes improved 5% sequentially to 22.3 million sq. ft., marking the eighth straight quarter with absorption above the 20 million sq. ft. mark.

Bengaluru led the market with the lowest vacancy rate at 9.2%, followed by Mumbai at 10.6% — its lowest since 2015. The National Capital Region (NCR) and Hyderabad also witnessed significant reductions in vacant office space.

As a result, rental rates increased across all major Indian cities, underscoring the depth of demand in the Grade A commercial segment.

Tech and Global Capability Centers (GCCs) Drive Growth

India’s technology and services industries remain the largest contributors to office leasing. The tech sector accounted for 31% of overall leasing activity, while Global Capability Centers (GCCs) — offshore units of multinational corporations — made up approximately 38%.

Bengaluru emerged as the GCC hub, accounting for nearly 40% of transactions in this category. Cities like Pune and Hyderabad are also witnessing a sharp rise in GCC expansion, driven by cost efficiency, talent availability, and improved infrastructure.

Multinationals from the US and Europe are consolidating regional offices into India, leveraging its affordable operational costs and skilled English-speaking workforce.

Regional Market Snapshot

Bengaluru

Bengaluru continues to dominate India’s office leasing landscape, benefiting from its tech ecosystem, talent pool, and large integrated business parks. Vacancy levels at 9.2% indicate an almost saturated market, prompting developers to launch new suburban campuses.

Mumbai Metropolitan Region (MMR)

Vacancies in MMR fell to 10.6%, their lowest in a decade, with Bandra-Kurla Complex (BKC) and Powai emerging as the most sought-after zones. Flexible workspace operators and BFSI companies led the demand surge.

Hyderabad

Hyderabad maintained a healthy pipeline of new projects, yet demand continues to match supply. With a vacancy rate near 22%, the city offers growth headroom and competitive rentals, attracting IT and pharma companies.

NCR (Delhi-Gurugram-Noida)

The NCR office market recorded its lowest vacancy rate since 2012 at around 20.2%. Gurugram remains the preferred hub for tech parks and coworking spaces, while Noida is gaining momentum with new metro connectivity and Grade A office developments.

Market Outlook: Sustained Growth Ahead

Nuvama projects 50–54 million sq. ft. of completions annually through 2026, with steady absorption likely to keep vacancies moderate. Annual rental growth is expected to remain between 6–8%, supported by continued demand from IT, BFSI, and manufacturing sectors.

The report identifies Prestige Estates, Brigade Enterprises, DLF, Embassy REIT, and Mindspace REIT as the best-positioned players to capitalize on India’s thriving office market, given their strong portfolios, execution capabilities, and recurring income streams.

Analysts also expect consolidation to continue as financially stronger developers expand market share, while smaller, debt-laden players may exit.

Structural Drivers of India’s Office Real Estate Boom

1. Economic Stability: India’s GDP growth rate above 6% continues to attract foreign corporations expanding their presence.

2. Workplace Evolution: Hybrid work models have stabilized, creating consistent demand for flexible, high-quality spaces.

3. Government Incentives: Simplified FDI policies and Smart City missions are encouraging global firms to establish regional headquarters.

4. Global Offshoring Shift: Corporates are increasing offshore operations in India to reduce operational costs amid global inflation.

These structural factors position India as Asia’s most resilient office market in 2025.

Challenges and Watchpoints

• Global Headwinds: Slowdowns in the US and Europe could temporarily reduce demand from tech clients.

• Rising Construction Costs: Inflation in steel and cement prices could affect project viability.

• Infrastructure Delays: Rapid demand growth in Bengaluru and Hyderabad may strain connectivity and urban infrastructure.

• Regulatory Approvals: Developers still face delays in clearances across key metros.

However, long-term fundamentals remain solid, with consistent leasing trends expected to sustain through 2026.

Conclusion

India’s office real estate sector has entered a new growth cycle — one defined by strong leasing, rising rentals, and sustained corporate confidence. As demand continues to outpace supply for the sixth straight quarter, India’s position as a global commercial hub has never been stronger.

With developers scaling up Grade A portfolios and multinational occupiers deepening their commitments, 2025 marks a defining year for India’s office market transformation.

Disclaimer:
This article is based on Nuvama Institutional Equities’ “Hot Property” report and industry data as of October 17, 2025. It is intended solely for informational purposes and does not constitute financial or investment advice.