India's Office Market Transactions Surge by 74% in Q1 2025: Report

Mumbai, April 3 (NationPress) The leading eight office markets in India experienced a remarkable surge in transaction activity, totaling 28.2 million square feet (mn sq ft) in Q1 (January-March) 2025, marking the highest volume ever observed in a single quarter, as per a recent report from Knight Frank India.

This impressive growth is attributed to robust economic momentum and heightened occupier confidence, resulting in a 74 per cent year-on-year (YoY) increase, surpassing the previous record set in Q3 2024 by 48 per cent, the report noted.

Leading the way, Bengaluru accounted for 12.7 mn sq ft in transactions, making up 45 per cent of the overall office space uptake, with a staggering 259 per cent YoY growth compared to Q1 2024. Pre-commitments dominated the Bengaluru market, comprising 58 per cent or 0.7 mn sq m (7.4 mn sq ft) of the area transacted.

Hyderabad maintained consistent momentum with 4 mn sq ft in office demand, while Pune and Mumbai reported 3.7 mn sq ft and 3.5 mn sq ft respectively, achieving new quarterly transaction records.

Bengaluru and Pune exceeded the national YoY growth rate of 74 per cent, establishing themselves as the primary drivers of India’s office market.

The surge in office transactions was largely propelled by Global Capability Centres (GCC), which recorded 12.4 mn sq ft in transactions, representing 44 per cent of the total market share. Additionally, third-party IT services accounted for 5.5 mn sq ft or 19 per cent of the market share, alongside flex operators also with 5.5 mn sq ft, capturing 20 per cent of the market.

In Bengaluru, GCCs and third-party IT services dominated, transacting 8 mn sq ft and 2.1 mn sq ft respectively. Meanwhile, Pune led in flex space transactions, with 1.61 mn sq ft taken up by flex operators during the quarter.

The significance of Global Capability Centres in spearheading India’s office market cannot be overstated, accounting for 44 per cent of total demand with 12.4 mn sq ft transacted. Bengaluru was a key contributor, with nearly 8 mn sq ft, representing 65 per cent of all GCC transactions in Q1 2025.

Shishir Baijal, Chairman and Managing Director of Knight Frank India, remarked: "Q1 2025 represented an extraordinary phase for the Indian office space market. The demand for GCCs continues to reach new heights, enhancing global perceptions of India as a long-term investment hub."

He further noted, "With completions lagging behind transactions since 2021, vacancy rates have decreased from 17.2 per cent to a healthier 14.3 per cent in Q1 2025. This supply constraint across major markets has contributed to rising rental rates since early 2022."

As India persists in leading growth metrics, the office space market faces limited challenges, primarily from constrained supply, and appears well-placed to sustain its momentum into 2025, the report added.