Knight Frank India’s latest quarterly report reveals a 6% year-on-year drop in gross office leasing across India’s top eight metro cities during July–September 2025, primarily due to decreased GCC activity and lingering global uncertainties. Despite this quarterly dip, annual office space demand is still set to reach a record high, showing resilience in India’s commercial real estate sector.
Key Highlights of the Report
- Gross leasing stood at 17.8 million sq ft, down from 19 million sq ft last year.
- Aggregate leasing for January–September 2025 rose by 24% to 66.7 million sq ft.
- Ongoing global headwinds affected GCC-driven demand, with GCC leasing down 20% this quarter.
- Despite headwinds, year-end projections are optimistic, targeting a record 85 million sq ft in total.
Trends in Major Cities
- Bengaluru: Leasing fell 21% in Q3 to 4.2 million sq ft, yet FY25 YTD demand rose 63% to 22.5 million sq ft.
- Hyderabad: Q3 leasing grew 33% to 2.9 million sq ft; Jan–Sep absorption up 21% to 8.8 million sq ft.
- Chennai: Q3 up 9% to 2.8 million sq ft; nine-month absorption jumped 41% to 7.9 million sq ft.
- Delhi-NCR: Q3 dropped 15% to 2.7 million sq ft; nine-month absorption rose 12% to 9.9 million sq ft.
- Pune: Q3 down 9% to 2.3 million sq ft; YTD up 7% to 7.4 million sq ft.
- Mumbai: Q3 plunged 27% to 1.9 million sq ft; YTD dropped 12% to 7.4 million sq ft.
- Kolkata: Q3 soared 190% to 0.5 million sq ft; YTD up 87% to 1.6 million sq ft.
- Ahmedabad: Q3 up 13% to 0.4 million sq ft; YTD declined 41% to 1.2 million sq ft.
Factors Impacting the Quarterly Dip
- Reduced leasing activity by multinationals establishing new GCCs.
- Global economic uncertainties are affecting corporate expansion plans.
- Sequential decline in quarterly leasing—from 28.2 mn sq ft (Q1) to 20.7 mn sq ft (Q2), and further to 17.8 mn sq ft (Q3).
Resilience and Growth Hotspots
- Despite the Q3 slowdown, cities like Hyderabad, Chennai, and Kolkata posted strong gains in both quarterly and year-to-date terms.
- Overall annual absorption may touch new highs, supported by surging domestic demand and return-to-office momentum.
The FlexInsights Take
The Indian office leasing market continues to adapt in 2025, demonstrating strength even amid global turbulence and a selective slowdown in GCC-driven absorption. While quarterly numbers show a temporary dip, robust growth in Hyderabad, Chennai, and Kolkata stands out, signalling that India’s office market is far from uniform and is bolstered by diverse demand sources. Tenants and investors should track these shifting regional patterns and take advantage of the emerging momentum in resilient micro-markets—while being prepared for cyclical swings in headline numbers.
