Indian Commercial Real Estate: A High-Growth, Cost-Effective Destination
Mumbai, September 8, 2025 — Equirus Capital, a leading investment banking firm, has released a comprehensive report on the growth of the Indian real estate sector, highlighting the significant rise in demand for commercial space in the top 8 Indian cities.
Real EstateCommercial SpaceCagrBengaluruCosteffectiveReal Estate MumbaiSep 08, 2025
India has become a high-growth, cost-effective destination for office space. Businesses are increasingly looking at India for its scalability, affordability, and a skilled talent pool. The demand for commercial space in the top 8 Indian cities has grown at an 11% CAGR from 2020 to 2025, increasing from 39.3 million square feet to 66.4 million square feet.
As global office markets mature, Indian cities are dominating net absorption. The cumulative net absorption of office space from CY16 to 9MCY24 (first nine months of 2024) for cities like New York (-5.4 million square feet), London (-3 million square feet), Hong Kong (3.6 million square feet), Beijing (24.7 million square feet), Mumbai MMR (39.6 million square feet), Tokyo (52 million square feet), and Bengaluru (75.2 million square feet) underscores this trend.
World-class office spaces in India come at competitive rental costs. As of Q3CY24, Mumbai and Bengaluru offered some of the most competitive rental rates among global cities. London was the costliest, with office space rentals at $207 per square foot per year. New York recorded rentals at $82, Tokyo at $76, Beijing at $56, Hong Kong at $70, Mumbai at $27, and Bengaluru at the most affordable rate of $27 per square foot per year.
Bengaluru has emerged as one of the most cost-effective cities for global enterprises in terms of workforce. The operating cost in a Tier-II US city per Full-Time Employee (FTE) for Business Process Management (BPM) is indexed at 100, while the same cost in Bengaluru is indexed at 19 as of FY23. This significant cost advantage makes Bengaluru an attractive destination for global businesses looking to optimize their operational expenses.
Frequently Asked Questions
What is the CAGR of commercial space demand in the top 8 Indian cities from 2020 to 2025?
The demand for commercial space in the top 8 Indian cities has grown at a Compound Annual Growth Rate (CAGR) of 11% from 2020 to 2025.
Why is Bengaluru considered a cost-effective city for global enterprises?
Bengaluru is considered cost-effective for global enterprises due to its significantly lower operating costs, with workforce costs being almost 81% lower compared to Tier-II US cities.
What is the net absorption of office space in Bengaluru from CY16 to 9MCY24?
The net absorption of office space in Bengaluru from CY16 to 9MCY24 (first nine months of 2024) is 75.2 million square feet.
What are the rental costs for office space in Mumbai and Bengaluru as of Q3CY24?
As of Q3CY24, the rental costs for office space in Mumbai and Bengaluru are $27 per square foot per year.
How does the operating cost in Bengaluru compare to a Tier-II US city for BPM services?
The operating cost in a Tier-II US city per Full-Time Employee (FTE) for Business Process Management (BPM) is indexed at 100, while the same cost in Bengaluru is indexed at 19 as of FY23.
Related News Articles
India's Thriving High Street Retail: A Win-Win for Investors and Real Estate Developers
Highstreet retail is revolutionizing India's urban landscape, driving economic growth and transforming consumer experiences.
Mumbai's Residential Market Set to Soar: ₹2 Lakh Crore in Sales by 2030
Mumbai's residential market is expected to exceed ₹2 lakh crore in sales by 2030, driven by improved connectivity and infrastructure development, reports JLL. The city's residential sales value is anticipated to surpass ₹1.35 lakh crore in 2024.
Indian Real Estate Market Sees a Shift: Home Sales Down, Property Prices Up
Major cities like NCR, MMR, Bengaluru, and Pune drive sales, while property prices rise across the country.
Prestige Estates to Launch Rs 52,000-Cr Housing Projects by March 2025 Amid Strong Demand
Prestige Estates, one of the leading real estate developers in India, is set to launch a massive Rs 52,000-crore housing project by March 2025, capitalizing on the strong demand in the mid-income segment. The company is optimistic about the market prospec
NBCC Eyes Acquisition of Defunct PSUs to Redevelop and Monetize Land Banks
NBCC India Ltd. is planning to acquire defunct public sector undertakings (PSUs) to redevelop and monetize their land, leveraging its expertise in construction and project management. This move aligns with the government’s plan to monetize non-core assets
Mumbai Police Seizes Rs 388 Crore in Mahadev Online Betting Scandal
The properties seized include investments made by a Mauritius-based firm, Tano Investment Opportunities Fund, which is linked to Hari Shankar Tibrewal, and significant real estate assets...