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Industry players say the Indian office market has witnessed notable sectoral realignment in transaction patterns through 2024, reflecting broader economic and industry dynamics like expansion.
The Indian office market is poised to experience positive growth in 2025, driven by multiple favorable factors shaping the commercial real estate landscape, Anarock says in its report.
The net office absorption in India’s top 7 cities reached a six-year high of nearly 50 million square feet (sqft), recording a 29 per cent year-on-year jump as compared with 38.64 million sqft in 2023, according to a report by ANAROCK. The seven cities are Bengaluru, Chennai, Hyderabad, Mumbai Metropolitan Region (MMR), Pune, Kolkata, and National Capital Region (NCR).
This resurgence is particularly noteworthy when compared to the pandemic-induced low of 24.71 million sqft in 2020.
Southern markets, particularly Bengaluru and Hyderabad, continue to dominate the net office absorption landscape, with Bengaluru leading at 14.9 million sqft (34 per cent YoY growth), followed by Hyderabad at 7.5 million sq. ft. (7 per cent YoY growth), collectively accounting for 45 per cent of total absorption. Chennai witnessed a YoY growth of 31 per cent to reach 5 million sq. ft. net office absorption in 2024.
National Capital Region (NCR), showcased exceptional growth with 61 per cent YoY increase — reaching 9.5 million sqft in 2024, primarily driven by robust demand from Global Capability Centers (GCCs) and the technology sector.
The western office markets present a mixed picture, with the Mumbai Metropolitan Region (MMR) showing robust YoY growth of 55 per cent to reach 7.2 million sqft, while Pune with a net office absorption of 4.8 million sqft experiences a marginal decline of 4 per cent.
The new office supply totalled 48.1 million sqft, marking a marginal 1 per cent increase from 2023.
According to the report, India’s office market vacancy levels demonstrated significant variations across major cities in 2024, with the Pan India average settling at 16.5 per cent, which is a 1.3 per cent decline compared to 2023.
The report said the share of IT/ITeS to overall leasing dropped to 28 per cent in 2024 from 32 per cent in 2023 and the share of co-working dropped to 21 per cent in 2024 from 25 per cent in 2023. However, the share of BFSI rose to 17 per cent in 2024 from 13 per cent in 2023.
What Does Rising Office Absorption Mean?
Industry players said the Indian office market has witnessed notable sectoral realignment in transaction patterns through 2024, reflecting broader economic and industry dynamics like expansion.
Peush Jain, managing director (commercial leasing and advisory) at ANAROCK Group, said, “The year 2024 marked a significant milestone for India’s office market across the top 7 cities, recording the highest net absorption since 2019. The market witnessed robust activity throughout the year, driven by strong occupier demand and strategic expansion plans of various sectors.”
The market fundamentals strengthened considerably in 2024, with average office vacancies dropping to 16.5 per cent from 17.8 per cent in 2023, despite the substantial new supply addition of over 48.1 million sqft, he added.
Ashish Sharma, assistant vice-president (operations) of Brahma Group, said the surge in office space demand in 2024 marks a significant rebound in the commercial real estate sector.
“NCR region out with a remarkable 61% year-on-year growth, reaching 9.5 million square feet, driven largely by the expanding needs of Global Capability Centers (GCCs) and the technology sector. Furthermore, this exceptional demand reflects the resilience of India’s office market and underscores the growing importance of these sectors in shaping the future of workplace dynamics, positioning NCR as a key hub for business growth and innovation,” Sharma added.
Pan India office rentals (average) registered a significant YoY increase of 5 per cent to reach Rs 86 per sqf per month. This upward trajectory is particularly noteworthy when compared to the 2019 baseline, showing an impressive 18 per cent growth over the six-year period.
The report stated that the Indian office market is poised to experience positive growth in 2025, driven by multiple favorable factors shaping the commercial real estate landscape. The steady revival of global economies, particularly in the technology sector, is expected to drive renewed demand for office spaces across India’s top 7 cities.
India’s position as a preferred destination for Global Capability Centers (GCCs) continues to be a primary catalyst for office space absorption. The evolution of workplace strategies continues to influence market dynamics. While hybrid work models remain prevalent, organizations are reimagining their office spaces to enhance collaboration, innovation, and employee well-being.
Robust Growth In Bengaluru
On the robust growth in southern market, Darshan Govindaraju, director of Vaishnavi Group, said Bengaluru continues to attract investments from domestic and global companies alongside providing an ecosystem of rapid growth for the startups, leading to the high absorption of office spaces.
“This is propelled by the government’s focus on Ease of Doing Business, infrastructure projects such as metro rail, flyover and underpasses etc., and the presence of a large talent pool, making the city an ideal investment for occupiers. This is leading to the consistent surge in office space absorption despite changing market dynamics and solidifying the city’s stance as the best place for investment,” he added.
Shesh Rao Paplikar, founder & CEO of Bhive Workspaces, said India’s southern states form one of the biggest markets for real estate in the country, attracting companies from across the globe who are looking for state-of-the-art office spaces to set their IT, ITeS, Global Capability Centres (GCCs) and other captive centres.
“The rise of the flex space industry, which has a significant presence in Bengaluru, becomes a focal point for occupiers to invest in the city, driving up absorption. This also assumes significance for the commercial real estate industry as coworking and managed workspaces today account for roughly one-third of all office space absorption and has been one of the biggest forces in its growth,” Paplikar added.
