Indian office REITs are thriving in 2025, driven by firm GCC hiring and increasing office space demand, according to Jefferies. Office vacancy rates have dropped, rentals are rising, and REITs outperform markets. A favourable interest rate outlook and tightening supply could further boost growth in the sector.
Indian office real estate investment trusts (REITs) have significantly outperformed both the property sector and broader markets in 2025, driven by strong demand and favourable market conditions, according to a recent report by Jefferies. The multinational investment firm attributes this success to increased hiring by Global Capability Centres (GCCs) and a stronger return-to-office trend among corporates.
Jefferies highlighted that companies are increasingly opting for REIT structures, leading to a decline in office vacancy levels by 1.5 percentage points in 2024. However, vacancy rates remain five percentage points above the 2019 lows. The report further noted that net office absorption in 2024 reached a record 50 million square feet, surpassing supply by 10%—a key indicator of rising demand.
A favourable interest rate environment also boosts REIT’s performance. “Rentals have also started rising, though barring few marquee properties…,” Jefferies observed, suggesting that while rental growth is underway, it is still selective across the market. This uptick in rental prices aligns with the overall strengthening fundamentals of office REITs.
The report emphasized that Indian office REITs have outperformed the BSE Realty Index by 22-31 percentage points year-to-date in 2025, marking a turnaround following two years of underperformance, supported by a return to an 8-10% growth in distribution per unit (DPU). Despite weaker market conditions in recent months, Jefferies remains optimistic about the sector’s resilience.
“Valuations are still at long-term average NAV (net asset value) discounts. A potential rise in office rents on tightening supply and further decline in yields could drive upside surprises, as NAVs can potentially inflect higher,” Jefferies stated. This suggests that the current market conditions could pave the way for further growth in the sector.
REITs, which own and operate income-generating real estate, continue to attract investor interest due to their ability to generate stable returns. With a strong office demand outlook, declining yields, and competitive valuations, Indian office REITs are well-positioned for continued growth in the coming months.
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