India's commercial office market has achieved “record-breaking” absorption of 66.4 million square feet in 2024, marking 14 percent year-on-year (YoY) growth even as the market is projected to touch 65-70 msf demand in 2025, according to a FICCI-Colliers report.
The report stated that Bengaluru led with its highest-ever absorption of 21.7 msf in 2024, while Hyderabad registered the strongest growth at 55 percent. The report highlighted that shift from a supply-led to an occupier-driven market has been cemented by three consecutive years of leasing volumes exceeding 50 msf.
Global Capability Centres (GCCs) have emerged as a major demand driver, with leasing surging 41 percent YoY to 25.7 msf in 2024. Bengaluru captured 47 percent of GCC leasing, while Mumbai witnessed a fourfold increase in GCC uptake compared to 2023, it said.
Colliers India released its latest report “India Office: Setting New Standards for 2025” at the 18th FICCI Real Estate Summit in New Delhi on February 11.
Technology sector's traditional dominance has declined from 40-50 percent to 25 percent of total leasing, as engineering and manufacturing firms, banking and financial services, and flexible workspace operators collectively emerge to account for over half of Grade A office uptake. Flex spaces have particularly dominated in Delhi-NCR, Hyderabad, and Pune regions, the report said.
"Office leasing is expected to grow another 8-10 percent in FY26, fuelled by demand from GCCs and financial services sector," said Raj Menda, Chairman, FICCI Committee on Urban Development and Real Estate & Chairman of Supervisory Board, RMZ Corporation.
The market's evolution reflects a fundamental shift in occupier preferences, with sustainability becoming a core consideration. Over 70 percent of leasing now concentrated in green-certified buildings, expected to reach 80-85 percent in 2025, the report observed.
Arpit Mehrotra, Managing Director- Office Services, Colliers India, said, "The occupier-driven Indian office market will continue to diversify throughout 2025 and developers will become increasingly agile in catering to evolving preferences.”
Expansion of REITs landscape
The Real Estate Investment Trust (REIT) landscape is expanding rapidly, with approximately 80 million square feet currently under REITs. The listing of India's first Small & Medium REIT (SM-REIT) in 2024 has opened new avenues for retail investors, with potential REIT-able stock identified at an additional 400 msf.
Looking ahead to 2025, the Indian office market is expected to see new supply of 60-65 msf, while vacancy levels are projected to decline to 15-16 percent. Average rental values are forecast to reach Rs 100 - Rs 110 per square foot per month, the report said.
Addressing the gathering, Gaurav Pandey, CEO, Godrej Properties Ltd presented snapshots of the residential real estate market and said that that the market share of the top 15 developers has doubled in the last five years.
He said that it has reached around 19 percent and consolidation of the demand for grade-A builders is further expected in years to come.
"We are also noticing one more trend that corporate developers and top 15 developers are increasing market share. So, in the last five years, the market share has doubled for them and currently stands at about 19 percent,” he said.
He added that this share will increase in next three years from now.
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