Resilient Leasing Surge Propels India's Office Market to Record Highs

India's office market defies Asia-Pacific downturn, setting record leasing volumes in 2025. Major cities see increased demand, driven by Global Capability Centres and IT services revival. Rents rise despite substantial new supply, with Bengaluru leading growth. India's market stability contrasts with regional challenges, ensuring continued investor interest.

India's office market is poised for a landmark year, maintaining robust performance amid a wider slowdown in the Asia-Pacific region. According to the Q3 2025 report from Knight Frank, leasing activity in Indian cities like Bengaluru, Delhi-NCR, and Mumbai surged, driven by strong demand from Global Capability Centres (GCCs) and a rebounding third-party IT services sector. Notably, India transacted 8.8 million square feet of office space in the third quarter alone, with expectations of touching a historic leasing volume of 50 million square feet by year-end, breaking the previous 2024 record of 41 million square feet.

Despite the introduction of nearly nine million square feet in new office supply, rents in key markets such as Bengaluru, NCR, and Mumbai increased by an average of 4.3% year-on-year. This resilience is credited to India's diversified tenant base and a stable economic outlook, contrasting with other Asia-Pacific landlords who prioritize occupancy amid higher vacancies. Bengaluru emerged as a dynamic market leader with rents rising 8.8% year-on-year, followed by steady increases in Delhi-NCR and Mumbai. Current vacancy rates stand at 11.5% in Bengaluru, 12.5% in NCR, and 17.3% in Mumbai.

Shishir Baijal, Chairman and Managing Director of Knight Frank India, remarked on India's market stability, highlighting its role in global business strategies and bolstered by GCCs and IT sector activity. Across Asia-Pacific, prime office rents decreased by 1.4% year-on-year, with China's cities encountering the most significant declines. This divergence underlines India's resilience and appeal to global occupiers, as noted by Tim Armstrong, Knight Frank's Global Head of Occupier Strategy and Solutions. The firm anticipates subdued regional rental growth due to recent construction booms, with premium space demand supporting key markets into 2026.

(With inputs from agencies.)