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.
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