India’s office market sees robust demand of 34.5 mn sq ft in H1 CY25; vacancy dips on strong absorption

India's office market saw vacancy rates declining by 210 basis points (BPS) between CY'24 and CY'25, underpinned by robust demand of 34.5 million square feet in H1 CY'25 and consistent absorption across major business hubs, according to the latest CREDAI-CRE Matrix report. Around 28.8 million square feet of new office stock was added in H1 CY’25, with Pune contributing nearly 30% of new supply during the period, the data shows.

The Indian office market’s resilience is anchored by a balanced demand-supply ratio of 1.3X over the last six quarters, showing the continued confidence of occupiers and the strategic expansion of Global Capability Centres (GCCs). The ongoing shift towards flexible work models and strong domestic demand are also driving robust absorption rates across Bengaluru, Mumbai Metropolitan Region (MMR), Delhi-NCR, and Hyderabad, says the report, adding that the office market absorbed 17.3 million square feet of fresh space during Q2 CY’25.

The report illustrates diversified occupier demand across sectors, with IT/ITeS leading at 24% contribution, followed by BFSI at 20% and co-working spaces at 19%. Hyderabad has also emerged as the premier co-working destination, contributing 29% to the sector’s demand in Q2 2025. Hyderabad is also well-positioned to surpass the Mumbai Metropolitan Region in total office stock by the next quarter, the data shows.

From a supply perspective, emerging markets like Pune and Hyderabad collectively contributed 54% of total office supply in Q2 2025. Also, Pune and Bengaluru accounted for 40% of aggregate demand during the corresponding period, reinforcing their positions as key absorption centres in the commercial real estate landscape.

Delhi-NCR continued to show healthy growth momentum in Q2 CY’25, as the region recorded 4.9 million sq ft demand in H1 CY’25, marking a 23% quarter-on-quarter growth. The momentum was driven by strong uptake from BFSI, professional services, and healthcare occupiers. Despite maintaining a relatively high vacancy of 20.8%, leasing activity in key hubs such as Gurgaon and Noida remained steady.

The report says Ahmedabad, while witnessing a moderation in activity, remains on a steady growth path, as the city witnessed 0.5 million sq ft demand in H1 CY’25, with activity moderating compared to the previous year. Shekhar Patel, President of CREDAI, said, “India’s office market is entering a new era of maturity and expansion. What’s most striking is that growth is no longer confined to traditional metros as emerging cities are steadily becoming integral to the country’s office landscape.”

Strong domestic occupier activity, ongoing GCC expansion, and the rapid rise of co-working—particularly in Hyderabad—have sustained robust absorption levels, feels Abhishek Kiran Gupta, CEO & Co-Founder of CRE Matrix. "With the demand-to-supply ratio holding steady at 1.2X and pan-India rentals climbing to ₹90 per sq. ft per month—up nearly 5% in just one quarter—India has firmly cemented its position as a landlord’s market."

Despite significant new supply additions, the demand-to-supply balance also remained favourable, resulting in further compression of vacancy levels across prime hubs. The report says the pan-India weighted average rentals climbed to ₹90.7 per square ft per month, reflecting healthy annualised growth of 4.7% in Q2 CY'25 compared to Q1 CY'25.

In its outlook for the remainder of 2025, the report says there's a strong pipeline of quality supply scheduled across Tier-1 cities. Healthy levels of pre-commitment leasing, combined with compressed vacancy rates, are expected to provide stability and ensure sustained market momentum.

CREDAI, the apex body of private real estate developers in India, represents 13,000+ developers across 230 city chapters in 20 states, while CRE Matrix is a leading real estate data analytics platform, which decodes transaction records across office, retail, warehousing, industrial, and residential assets.