Is Commercial Space Demand Growing at 11% CAGR in Top Indian Cities from 2020-25?
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Synopsis
According to a recent report, the demand for commercial real estate in India's top eight cities has surged, achieving a remarkable 11% CAGR from 2020 to 2025. This trend positions India as a leading destination for businesses looking for cost-effective office spaces.
Key Takeaways
- 11% CAGR: Commercial space demand in India's top cities is growing rapidly.
- Bengaluru's Advantage: Operating costs are 81% lower than Tier-II US cities.
- Scalability & Affordability: India is becoming a preferred destination for businesses.
- Competitive Rentals: Mumbai and Bengaluru offer the most competitive office rental rates globally.
- Leading in Net Absorption: Bengaluru tops global net absorption figures.
New Delhi, (NationPress) The demand for commercial real estate has experienced a remarkable 11% Compounded Annual Growth Rate (CAGR) from 2020 to 2025 across the top eight cities in India, according to a report released on Friday.
Bengaluru has positioned itself as one of the most cost-effective cities for skilled labor, with operational costs being nearly 81% lower than those in Tier-II cities in the United States, as highlighted by Enquirus Capital, an investment banking firm.
For perspective, the operating cost in a Tier-II US city per Full-Time Employee (FTE) in Business Process Management (BPM) is indexed at 100; in contrast, Bengaluru stands at a mere 19 (as of FY23).
The report indicates that India is becoming a high-growth, cost-efficient destination for office space, attracting businesses seeking scalability, affordability, and a skilled workforce.
Specifically, the demand for commercial space in the eight largest Indian cities surged from 39.3 million square feet (mn sq. ft) in 2020 to 66.4 million square feet (mn sq ft) by 2025, marking an 11% CAGR.
As global office markets mature, Indian cities are leading in net absorption.
The cumulative net absorption of office space from calendar year 2016 (CY16) to the first nine months of CY24 shows New York at -5.4 mn sq ft, London at -3 mn sq ft, Hong Kong at 3.6 mn sq ft, Beijing at 24.7 mn sq ft, Mumbai at 39.6 mn sq ft, Tokyo at 52 mn sq ft, and Bengaluru leading with 75.2 mn sq ft of net absorption, according to the report.
As of Q3CY24, office rental prices in Mumbai and Bengaluru are among the most competitive globally.
The report further reveals that London holds the title for the highest office rental costs at $207 per square foot annually, while New York and Tokyo follow at $82 and $76, respectively. In contrast, Bengaluru remains the most affordable at $27 per square foot annually.
Point of View
It is crucial to recognize the transformative impact of commercial space demand in India. The growth trajectory indicates a shift in global business strategies, with India emerging as a key player. This trend not only highlights the nation's economic resilience but also its evolving position in the global market.
NationPress
05/09/2025
Frequently Asked Questions
What is the CAGR of commercial space demand in India from 2020 to 2025?
The CAGR of commercial space demand in India's top eight cities is 11% from 2020 to 2025.
Which city in India is the most cost-effective for businesses?
Bengaluru is recognized as the most cost-effective city for global enterprises, with costs significantly lower than Tier-II US cities.
How much commercial space demand is projected by 2025?
The demand for commercial space is expected to grow from 39.3 million square feet to 66.4 million square feet by 2025.
