India’s office real estate market closed 2025 with a record net absorption of 61.4 million sq. ft., led by Bengaluru and Delhi NCR. Strong GCC and IT-BPM demand, rising rentals, tightening vacancies, and robust leasing activity strengthened the outlook for office REITs, yields, and long-term income stability
India’s office real estate sector ended 2025 on a historic high, recording net absorption of 61.4 million square feet across the top eight cities. This marked a 25% jump over 2024 and the strongest annual performance ever tracked by Cushman & Wakefield. The surge came despite a significant increase in new supply, signaling deep-rooted occupier confidence at a time when global commercial real estate is under pressure.
For investors and landlords, the milestone enhances cash flow visibility and reinforces the role of Indian office assets as stable, income-generating investments. Net absorption comfortably exceeded the previous year’s 49.1 million square feet, underscoring that demand is expansion-led rather than short-term consolidation-driven.
Core Markets Lead, Strengthening REIT Portfolios
Bengaluru remained the backbone of office demand, accounting for nearly 23% of national absorption with 14.4 million square feet. Delhi NCR followed closely at 10.9 million square feet, supported by strong activity in established business districts. Together, these two markets anchored national performance and continue to form the core of most listed office REIT portfolios.
Mumbai, Hyderabad, and Pune also delivered healthy absorption, while Chennai stood out with a sharp year-on-year surge, reflecting its growing appeal as companies diversify their India operations. Minor slowdowns in markets like Kolkata and Ahmedabad were largely attributed to timing and base effects, not weakening fundamentals.
Leasing Momentum Signals Long-Term Confidence
Gross leasing activity remained strong at nearly 88.7 million square feet, making 2025 the second consecutive year of peak leasing volumes. Nearly 80% of this activity came from fresh leases, highlighting expansion-driven demand rather than renewals. Gateway markets—Bengaluru, Mumbai, and Delhi NCR—continued to dominate, capturing around 62% of total leasing.
This pattern supports longer lease tenures, better tenant quality, and predictable annuity-style income, key metrics closely tracked by institutional investors and REIT managers.
GCCs and Sector Diversity Drive Structural Demand
Global Capability Centres emerged as a clear structural demand engine, leasing a record 29.3 million square feet and accounting for one-third of total leasing. IT-BPM firms remained the largest occupiers, while flexible workspace operators strengthened their position as a major demand driver. BFSI and engineering-led occupiers further diversified the tenant base, reducing sector concentration risks.
According to Cushman & Wakefield, the 2025 performance “reflects a durable growth cycle rather than a one-off spike,” pointing to sustained momentum supported by talent depth, infrastructure upgrades, and enterprise-led expansion.
Supply Expansion Meets Tightening Vacancies
Developers delivered around 53 million square feet of new office supply in 2025, crossing the 50-million mark for the first time. Yet, vacancies declined sharply by 210 basis points year-on-year, the steepest compression on record. Pre-commitments rose as occupiers moved early to secure high-quality Grade A assets, tightening availability across prime micro-markets.
Rental Growth Reinforces Yield Outlook
Rental values increased across all major cities, led by double-digit growth in Mumbai and Hyderabad. With rising rents, falling vacancies, and long-term leases, India’s office market enters 2026 with strong tailwinds for REIT distributions, yield stability, and capital market confidence—positioning the sector as a resilient asset class amid global uncertainty.
