Contact us
Feb 4, 2026•5 min read
Union Budget 2026: What It Means for India's Commercial Real Estate Sector
Read More
India's office market demonstrated strong resilience and broad-based demand in 2025, with the top metros collectively recording approximately 79.0 million sq. ft. of gross office leasing, reflecting a near 12% year-on-year increase from the 70 million sq. ft. reported in 2024. The growth was largely driven by Bengaluru, which accounted for nearly 31% of total leasing activity, followed by Delhi NCR and Mumbai at 16% each, and Hyderabad at 14%. While Hyderabad maintained a similar share to the previous year, its distribution moderated from 21% in 2024, indicating a more balanced demand spread across markets.
Average office rentals across India now stand at approximately INR 107 per sq. ft. per month, marking a 5% increase from INR 102 in 2024. This upward movement reinforces the continued pricing power of high-quality Grade-A assets and reflects occupiers'growing preference for premium, future-ready workspaces.
On the supply side, new completions surged 15% year-on-year, reaching a peak of 56.3 million sq. ft. in 2025, with Bengaluru, Hyderabad, and Pune dominating development activity with a cumulative share. Sectoral demand remained largely consistent, with IT/Flex operators and BFSI accounting for nearly 72% of leasing. At the micro-market level, corridors such as Outer Ring Road (ORR), Hyderabad's IT Corridor, Whitefield, and Pune's SBD North-East (Kharadi) recorded the highest absorption, underscoring the importance of established commercial ecosystems and strong connectivity.
GCC Momentum Shaping Demand
A defining theme of 2025 was the sustained expansion of Global Capability Centres (GCCs). The year witnessed 170+ GCC office take-ups, with 51% representing new setups and 49% expansions, signaling that India has firmly evolved into both a first-entry and scale market for global headquarters and strategic operations.
The top three GCC anchor cities were Hyderabad, Bengaluru, and Pune, with Hyderabad leading new setups while also showcasing the most diverse industry mix. In contrast, Bengaluru and Pune remained largely driven by IT, engineering, and manufacturing occupiers. Overall, GCCs accounted for nearly 30% of total office leasing in 2025, highlighting their growing influence on India's commercial real estate trajectory.
Outlook for 2026
Based on 2025 leasing trends and recent budget highlights, the outlook for 2026 is expected to build further momentum. Demand is likely to diversify beyond IT/ITeS into sectors such as BFSI, engineering and manufacturing, and pharmaceuticals, while co-working operators are expected to witness sustained demand.
Expansion strategies are also anticipated to decentralize toward Tier-2 cities, driven by cost advantages, improved infrastructure, and access to talent pools. Additionally, global sustainability mandates are expected to accelerate demand for green-certified assets, further strengthening the market for future-ready developments.
City Highlights
Bengaluru: Sustained Leadership
Bengaluru remained the undisputed leader among Indian office markets, recording approximately 24 million sq. ft. of absorption in 2025, representing a 12% increase from the previous year. The sectoral mix remained consistent from 2024, reflecting stable occupier demand.
Leasing activity was significantly stronger in the second half of the year, rising 25% over H1. While the first half (10.8 million sq. ft.) was largely driven by pre-commitments in North Bengaluru, the second half saw heightened activity across EBD and ORR. The top micro-markets in 2025 continued to be ORR, followed by Whitefield and North Bengaluru. Major transactions included deals by TCS, Airbus, Uber, and IBM.
Delhi NCR: High Growth Driven by Prime Assets
Delhi NCR recorded approximately 13 million sq. ft. of leasing in 2025, marking a strong 34% annual growth. This increase was largely concentrated in Noida micro-markets such as the Expressway and Sector 62, along with Delhi Aerocity, while Gurgaon activity remained stable. Leasing distribution between H1 and H2 was relatively balanced.
The growth was supported by a 37% rise in supply, while rental values increased by an impressive 18%, one of the highest in the country. This indicates that expansion was driven by demand for prime Grade-A assets rather than the opening of lower-cost micro-markets.
Notably, Delhi NCR also remained the only city witnessing a significant concentration of consulting and research occupiers. Key deals included Deloitte, Google, and Simpliwork, alongside Genpact and BlackRock.
Mumbai: Infrastructure-Led Demand Shift
Mumbai ranked as the third-largest office market with nearly 12 million sq. ft. of absorption, reaffirming its position as India's financial capital. BFSI remained the dominant sector, followed by IT and flexible workspace operators.
Supply declined compared to 2024, and when coupled with steady demand, resulted in an 8% increase in rentals. Unlike 2024, when central and western suburbs led activity, eastern corridors such as the Eastern Suburbs, Thane, and Navi Mumbai attracted stronger demand in 2025. This shift is largely attributed to ongoing infrastructure upgrades, including sea links and the anticipated operationalization of the Navi Mumbai International Airport. Prominent deals were concluded by HDFC Bank, Smartworks, and Wipro.
Hyderabad: Positioned for the Next Growth Cycle
Hyderabad recorded approximately 10.8 million sq. ft. of absorption, making it the only major city to witness a decline with absorption down 14% and supply down 12% year-on-year. However, a 10% increase in average rentals suggests that the moderation was not demand-led but rather a correction following supply abundance in 2024.
Momentum strengthened in the second half, which was 16% higher than H1, and the city continues to attract global leaders, particularly for GCC setups. With nearly 28 million sq. ft. of supply in the pipeline over the next 2–3 years, Hyderabad is expected to regain traction and remains one of the most cost-efficient Tier-1 markets. Leasing activity was evenly distributed between the IT Corridor and the Extended IT Corridor, with major deals including TCS, Clean Harbors, and LPL Financial.
Pune: Balanced and Expanding Demand
Pune witnessed close to 10 million sq. ft. of absorption, reflecting a 23% increase over 2024, alongside a sharp rise in second-half activity compared to H1. Demand remained concentrated in SBD North-East (Kharadi and Yerwada) due to airport proximity and an established ecosystem, followed by Baner and Balewadi in SBD North-West.
Meanwhile, Hinjewadi (PBD West) continued to attract campus-style developments catering to back offices, development centers, and training facilities. Sectoral demand was evenly distributed among IT, co-working, and engineering & manufacturing. Key transactions included British Petroleum, Smartworks, and Citigroup.
Chennai: High Growth with Cost Advantage
Chennai recorded approximately 8.7 million sq. ft. of absorption, representing nearly 28% growth, the second-highest among major metros after Delhi NCR. Activity remained evenly distributed throughout the year.
The city witnessed the largest increase in supply, nearly doubling over 2024, which helped maintain rental equilibrium. With average rents of around INR 78 per sq. ft., Chennai is currently one of the most cost-effective Tier-1 markets. Demand was primarily driven by IT and BFSI, marking a shift away from the previously dominant engineering and manufacturing sectors. MPR and OMR Zones 1 and 2 remained the top micro-markets, with emerging demand along Radial Road, one of the city's most affordable corridors. Major deals included Standard Chartered, TCS, and Walmart.
The Road Ahead
As indicated by 2025 leasing trends and recent budget announcements, 2026 is expected to witness continued momentum, supported by sectoral diversification beyond IT/ITeS into BFSI, engineering, manufacturing, and pharmaceuticals. Co-working demand is projected to remain strong as occupiers increasingly adopt flexible portfolio strategies.
Expansion is likely to decentralize toward Tier-2 cities, while global mandates will further accelerate demand for green-certified assets. Together, these trends position India's office market for sustained, future-ready growth anchored in diversification, quality, and long-term occupier confidence.
