India’s office real estate sector is witnessing a strong recovery and structural shift in 2025, fuelled by sustained demand from Global Capability Centres (GCCs), healthy domestic corporate expansion, and a growing preference for quality Grade‑A office space. Across major cities from Bengaluru to Hyderabad and the Mumbai Metropolitan Region (MMR), vacancy rates are tightening, and rental values are on the rise, signaling investor confidence and robust occupier activity in a market that had grappled with pandemic‑era challenges.
According to the CREDAI‑CRE Matrix India Office Report for Q2 CY’25, vacancy rates in the office market have declined significantly as demand continues to outpace supply, backed by strong tenant interest and healthy absorption across key hubs.
Key Takeaways
1. India’s office vacancy has declined to 14.7%
The overall office vacancy rate in India fell to 14.7% in H1 CY’25, reflecting a tightened market where occupier demand is absorbing new and existing space more quickly than it is coming to market. This improvement is supported by robust absorption of 34.5 million sq ft of office space in H1 CY’25.
2. 28.8 msf of new supply added in H1, with Pune contributing nearly 30%
Despite the strong leasing momentum, the market saw 28.8 million sq ft of new office supply in H1 CY’25, with Pune emerging as a key contributor — accounting for almost 30% of the new completions. The influx of fresh stock highlights continued development activity, especially in emerging micro‑markets outside the traditional metros.
3. Hyderabad is set to overtake MMR in office stock
One of the most striking trends in 2025 is Hyderabad’s rapid growth trajectory. The CREDAI‑CRE Matrix report notes that Hyderabad’s office stock is poised to overtake that of the MMR by the next quarter, underlining the city’s emerging role as a major office destination driven by IT/ITeS, services, and flexible workspace growth.
4. Pan‑India rentals climbed to ₹90.7 psf/month
Along with tightening vacancy, rental values across India’s office markets have climbed, with pan‑India averages rising to around ₹90.7 per sq ft per month — a reflection of landlords’ strengthened pricing power amid strong occupier demand.
What’s Driving the Office Market Upturn?
Strong occupier demand and steady business expansion are driving leasing activity across key office markets. This is tightening vacancies and strengthening rental values across cities.
GCC Expansion and Strong Domestic Demand
A central theme across recent reports is the significant contribution of Global Capability Centres (GCCs) to office leasing activity. GCCs, representing multinational service and technology centres, continue to expand their footprint in Indian cities. This has driven substantial absorption volumes and lowered vacancy. The trend is supported by India’s cost competitiveness, large talent pool, and favourable business environment.
Occupier Diversity and Sectoral Strength
Leasing activity is broad‑based — with IT/ITeS, BFSI (banking, financial services and insurance), and co‑working/flexible office models contributing significantly to demand. The diversified demand base has helped sustain absorption across cyclical variations, and flexible workspace continues to gain traction, especially in Hyderabad.
Emerging Cities and Supply Growth
While traditional hubs like Bengaluru, MMR, and Delhi‑NCR remain major contributors to demand, secondary and emerging markets — such as Pune and Hyderabad — are increasingly shaping supply dynamics. Pune’s strong addition of new stock and Hyderabad’s rapid growth reflect shifting preferences and infrastructure‑led expansion.
Rental Resilience
With vacancy rates shrinking and demand robust, landlords have been able to push rental values higher. Cities such as Delhi and Mumbai continue to command premium rents, contributing to the overall pan‑India rental increase.
City‑Level Snapshots
- Bengaluru continues to lead leasing activity thanks to strong tech and GCC demand.
- Delhi‑NCR remains a key market with ongoing corporate and BFSI leasing.
- Hyderabad’s rapid office stock build‑out signals its rise as a major corporate hub.
- Pune’s emergence as an important supply centre suggests offices are decentralising beyond traditional metros.
Outlook: What’s Next for India’s Office Real Estate?
The current market narrative points to sustained leasing momentum, continued infrastructure‑led expansion in emerging cities, and robust occupier confidence. Vacancy rates are likely to stay tight in the near term, while rental growth could continue as quality Grade‑A space remains in high demand. The ongoing GCC expansion story and domestic corporate growth are expected to remain key drivers of market performance.
In summary, India’s office market in 2025 exemplifies not just a post‑pandemic rebound — but a structural transformation rooted in diversified demand, new city‑level growth centres, and strengthening fundamentals.
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