India's Commercial Real Estate: A Key Driver of the $5 Trillion Economy
Urbanization, technological adoption, demographic shifts, and progressive reforms are helping India’s commercial real estate become a key driver of the nation’s economic growth. The real estate sector has become a major employer, a magnet for capital, and the foundational infrastructure enabling other industries to thrive. The Commercial Real Estate (CRE) segment, encompassing retail hubs, offices, data centers, and logistic spaces, acts as a primary multiplier in our economic engine. In this context, India’s journey towards becoming a $5 trillion economy is built on the stability and growth of our commercial real estate market.
The office market in India has seen remarkable growth, making it the fourth largest globally. The country has achieved a defining milestone by crossing the 1 billion square ft threshold in total office stock. This accomplishment reflects India’s resilience, adaptability, long-term momentum, and structural stability. The key end-user segment is fueled by rising Global Capability Centres (GCCs), third-party IT services, flexible workspace operators, and India-facing businesses.
The office sector has also showcased a strong post-pandemic rebound, with metro cities like Bangalore, Pune, and Hyderabad recording the highest rental appreciation, driven by consistent demand from technology firms, GCCs, and flexible workspace operators. Vacancy levels have followed a downward trajectory, declining from 23% in 2012 to less than 15% in 2025. At this juncture, the Indian office market stands at a pivotal inflection point. India must adopt a twin-pronged strategy by accelerating new supply creation while enhancing the productivity of existing assets. Approximately 31% of India’s office inventory is ready for retrofitting, offering the opportunity to reposition older buildings into high-performing, sustainable workplaces. India can also benefit by converting formerly restricted export zones into open market assets, laying the foundation for a more balanced and adaptive office ecosystem.
India’s data center sector is poised for rapid growth due to the government’s commitment to technological advancements and digitization. Initiatives like Digital India, BharatNet, and Smart City Missions underscore the government’s commitment to improving digital infrastructure, while the focus on data sovereignty has reinforced the need for local data storages. India’s AI mission, 5G cloud adoption, growing reliance on mobile internet, and digital solutions are also rewiring the data center demand curve. The Ministry of Electronics and Information Technology (MeitY) estimates India’s digital economy to grow from USD 370 billion in FY 2022-23 to a staggering USD 1 trillion by 2029-30, a transformation that underscores the scale of opportunity in this sector.
India’s first Real Estate Investment Trust (REIT) was listed in April 2019, marking a significant milestone for the Indian real estate investment landscape. Today, Indian REITs own about 143.9 million square ft of assets. Additionally, 20.5 million square ft is under development, with another 13.0 million square ft earmarked for future projects, signaling robust growth prospects. This continued expansion underscores India’s rising prominence as a hub for institutional real estate investments, with REITs playing a pivotal role in shaping and modernizing the country’s urban built environment. These trusts also serve as a compelling alternative for income-seeking investors, providing diversification benefits along with better results. Their strong performance underscores the robustness of the commercial real estate market in India and positions REITs as an increasingly attractive investment vehicle in the Indian capital markets.
Institutionalization, digital infrastructure, and policy are collectively reshaping the CRE landscape. Different asset classes, with their distinct trajectories, are contributing to the shared growth story. With a mature office segment that is globally competitive, a resilient and redefined retail sector, emergent and transformative data sectors, and REITs that serve as the financial instruments knitting these classes together through capital market access, India is poised to reach the 2 billion square ft milestone much quicker than previously planned.
