India's Office Real Estate Market Continues Growth in Q1 with High Occupier Demand
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Synopsis
India’s office real estate market has shown consistent growth in Q1 2025 with strong leasing activity and limited new supply, resulting in a significant drop in vacancy rates.
Key Takeaways
- Vacancy Rate decreased to 15.7% in Q1 2025.
- New Completions totaled 10.7 MSF.
- Bengaluru, Pune, and Delhi-NCR contributed significantly to new supply.
- Leasing Activity remained strong with a GLV of 20.3 MSF.
- Ongoing economic factors support future occupier activity.
New Delhi, April 23 (NationPress) India's office real estate sector has continued its upward momentum in Q1, propelled by strong leasing and limited new supply, leading to an overall vacancy reduction for the seventh consecutive quarter to 15.7 percent — a significant decline of 275 basis points (bps) from 18.45 percent in Q2 2023, according to a report released on Wednesday.
Supply limitations and high occupier demand in the first quarter across India's leading eight office markets have caused a decrease in the vacancy rate by 55 basis points (bps) to 15.7 percent, down from 16.25 percent in Q4 2024, as stated in Cushman & Wakefield's latest Q1 2025 Office Market Report.
In Q1 2025, total new office completions reached 10.7 million square feet (MSF).
Bengaluru (3.28 MSF), Pune (3.21 MSF), and Delhi-NCR (2.71 MSF) accounted for a combined 86 percent (or 9.2 MSF) of this new supply.
Hyderabad recorded a supply of 1.32 MSF, while Mumbai saw 0.18 MSF. Cities like Chennai, Kolkata, and Ahmedabad reported no new supply, resulting in reduced vacancy rates and increased rentals in these locations.
Additionally, office leasing activity remained robust in the first quarter, with gross leasing volume (GLV) across the top 8 markets hitting 20.3 MSF, reflecting a 5 percent year-over-year increase and aligning with the two-year average of 20 MSF per quarter, according to the report.
New leasing accounted for nearly 80 percent of this activity — marking the third consecutive quarter of this trend and indicating ongoing occupier expansion.
The gross leasing volume, which encompasses all leasing activities in the market, including fresh take-up, corporate open market renewals, and pre-leasing, serves as a gauge of overall market activity.
“The momentum in India's office sector has persisted into Q1 2025, bolstered by consistent closures of major deals and vigorous fresh leasing activity. The ongoing commitment of global occupiers to enhance their operations here reflects lasting confidence in India as a strategic business hub,” stated Anshul Jain, Chief Executive, India, SEA and APAC Tenant Representation.
India's status as the global center for technology, R&D, and innovation continues to solidify.
“The strong performance of the GCC segment — now contributing over 30 percent of gross leasing — highlights this confidence, and we anticipate this upward trend to sustain with more greenfield entries and expansion mandates,” Jain added.
Moreover, domestic economic factors such as diminishing inflation and expected rate cuts will further bolster occupier activity, he concluded.
