India's Commercial Real Estate Sector Thrives Amid Housing Slump
India's commercial real estate sector, including office and industrial & logistics (I&L), has shown robust leasing growth in 2025, while residential sales have declined.
Commercial Real EstateOffice LeasingIndustrial And LogisticsResidential SalesGlobal Capability CentresReal EstateOct 06, 2025
According to CBRE, the office segment recorded 59.6 million square feet (msf) of leasing across the top nine cities during January–September 2025, up 2 per cent year-on-year (Y-o-Y). Meanwhile, data from Savills India showed the I&L segment clocking 23.4 per cent growth, with leasing rising to 55.3 msf.
In contrast, housing sales fell 20 per cent across the top seven Indian cities during 9M 2025 compared with the same period last year, according to Anarock Research.
The office market, however, hit its best-ever leasing performance, largely powered by Global Capability Centres (GCCs), which contributed nearly 39 per cent of the total space taken up. Bengaluru, Pune and Delhi-NCR together accounted for 67 per cent of this GCC-led activity.
“This record-breaking performance reflects the resilience and evolving dynamics of India's commercial real estate sector. As occupiers seek future-ready spaces, sustained preference for flight-to-quality assets continues to anchor this momentum. Going forward, the sustained leasing in premium assets is expected to drive vacancy compression, and occupiers are likely to continue exploring peripheral locations, driven by the infusion of high-grade supply,” Anshuman Magazine, chairperson and chief executive officer, India, South-East Asia, Middle East & Africa, CBRE, said.
Bengaluru led the overall office absorption during January–September 2025 with 15.1 msf leased, representing 25 per cent of total activity. Mumbai and Delhi-NCR followed with 10.6 msf and 10.2 msf, respectively, together forming 61 per cent of the national total.
Technology companies remained the largest occupiers, followed by flexible space operators, and Banking, Financial Services and Insurance (BFSI) firms. Collectively, these three sectors made up 60 per cent of overall leasing.
The I&L segment also saw record-high activity during 9M 2025, propelled by rising demand from third-party logistics (3PL), manufacturing and e-commerce firms. Delhi-NCR, Mumbai and Pune accounted for 51 per cent of total leasing across Tier-I and Tier-II markets.
“India’s industrial and warehousing sector is entering a defining phase, with 2025 and 2026 expected to set new benchmarks in both demand and supply. The sector is undergoing a significant transformation, driven by the expansion of manufacturing, rising demand for modern grade-A distribution facilities, and the rapid development of Tier-II and Tier-III cities. Government initiatives, coupled with inclusive policies focused on infrastructure and manufacturing, have attracted positive responses globally, bringing in increased equity and investor confidence. As a result, India is steadily emerging as a global hub, repositioning itself as a key industrial and distribution destination,” said Srinivas N, managing director, industrial & logistics, Savills India.
While commercial segments surged, residential real estate lost steam after two strong years. Anuj Puri, chairperson, Anarock Group, said, “This (dip) can be largely attributed to the significant increase in housing prices in the last few years, which inevitably made residential homes unaffordable for many. Further, the uncertainties created amid the geopolitical tensions and global economic slowdown have also contributed to this.”
Amid the broader slump, Chennai was the only city to register sales growth (5 per cent) during 9M 2025. Analysts attribute this to new project launches, stable pricing, steady infrastructure upgrades, and robust demand from GCC-driven office expansion — factors that continue to draw homebuyers’ interest in the city.
Frequently Asked Questions
What is the current status of India's commercial real estate sector in 2025?
India's commercial real estate sector, including office and industrial & logistics (I&L), has shown robust leasing growth in 2025, with office leasing up 2 per cent year-on-year and I&L leasing up 23.4 per cent.
Why has the office market performed well in 2025?
The office market has performed well due to strong demand from Global Capability Centres (GCCs), which contributed nearly 39 per cent of the total space taken up. Cities like Bengaluru, Pune, and Delhi-NCR have seen significant activity.
What factors are driving the growth in the industrial and logistics (I&L) segment?
The I&L segment is growing due to rising demand from third-party logistics (3PL), manufacturing, and e-commerce firms. Government initiatives and inclusive policies focused on infrastructure and manufacturing have also contributed to this growth.
Why have residential sales declined in 2025?
Residential sales have declined due to significant increases in housing prices, making homes unaffordable for many. Geopolitical tensions and a global economic slowdown have also contributed to this decline.
Which city has seen growth in residential sales in 2025, and why?
Chennai is the only city to register sales growth (5 per cent) in 2025, attributed to new project launches, stable pricing, steady infrastructure upgrades, and robust demand from GCC-driven office expansion.
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