India's Office Leasing Surges 40% in H1 2025, Bengaluru Leads the Pack
Commercial real estate net leasing in India witnessed a 40% year-on-year increase, reaching 26.8 million sq ft across the top 7 cities. Bengaluru led with 6.55 million sq ft of absorption, followed by Pune and Hyderabad.
Commercial Real EstateOffice LeasingBengaluruPuneHyderabadReal EstateAug 24, 2025
Bengaluru, often referred to as the Silicon Valley of India, maintained its position as the market leader with 6.55 million sq ft of absorption. The city has long been a hub for IT and tech companies, and its continued dominance reflects the sustained demand for office space from these sectors.
Pune emerged as the fastest-growing market, recording a staggering 188% growth in leasing. The city saw a significant increase in new supply, with 5.7 million sq ft of new office space, a 533% jump from just 0.9 million sq ft in H1 2024. This surge is attributed to the completion of several large-scale IT parks and the city's growing appeal as a cost-effective alternative to Mumbai for corporate expansion.
Hyderabad, the second-highest market, reported 4.7 million sq ft of leasing, followed by Pune at 5.7 million sq ft, Delhi NCR at 3.7 million sq ft, Mumbai Metropolitan Region (MMR) at 1.9 million sq ft, Chennai at 1.5 million sq ft, and Kolkata at 0.1 million sq ft. Hyderabad's strong performance is driven by its established IT and tech ecosystem, making it a preferred destination for both domestic and international companies.
Delhi NCR, a major economic hub, saw a 35% year-on-year growth, registering 3.7 million sq ft of new supply. The region's growth is attributed to ongoing infrastructure developments and the city's strategic location, which continues to attract a diverse range of businesses.
Conversely, MMR experienced a 45% decline in new office supply, dropping to 1.9 million sq ft. This decline is primarily due to land acquisition challenges, regulatory delays, and developers' preference for refurbishment over new construction in the saturated Mumbai market.
Kolkata, representing the Eastern region, saw minimal supply addition of 0.1 million sq ft, reflecting limited corporate demand and slower economic activity in the area.
Peush Jain, MD - Commercial Leasing & Advisory, ANAROCK Group, noted that new office supply increased by 25% to 24.51 million square feet, creating balanced market dynamics. Vacancy rates improved marginally to 16.3%, and average rentals grew by 4% to INR 88 per square foot per month. The IT-ITeS sector dominated with a 29% market share, followed by co-working spaces at 22%.
The IT-ITeS sector has marginally expanded its transaction share to 29% in H1 2025 from 28% in H1 2024. Co-working space providers have sustained their strong market position at 22%, representing a modest 1% increase from the previous year, driven by continued demand for flexible workspace solutions and expansion by established operators.
The BFSI (Banking, Financial Services, and Insurance) sector has maintained consistent performance at 18%, driven by the expansion strategies of domestic banks and the establishment of new financial technology centers. E-commerce companies have increased their footprint to 4% from 3%, reflecting the sector's expansion plans following growing consumer spending patterns.
Consultancy businesses have grown to 9%, benefiting from increased demand for professional services and advisory capabilities. However, the manufacturing and industrial sector experienced a notable decline to 13% from 15%, primarily due to cautious expansion strategies amid global supply chain uncertainties. The miscellaneous category decreased to 5% from 8%, indicating consolidation within traditional office-using sectors and more focused leasing strategies across emerging industries.
Overall, the commercial real estate sector in India is showing strong resilience and growth, with key cities like Bengaluru, Pune, and Hyderabad leading the way. The continued expansion of the IT-ITeS sector, co-working spaces, and BFSI sector is expected to drive further growth in the coming years.
Frequently Asked Questions
Which city reported the highest office leasing in H1 2025?
Bengaluru reported the highest office leasing with 6.55 million sq ft of absorption.
What was the percentage growth in office leasing in Pune?
Pune saw a 188% growth in office leasing, making it the fastest-growing market.
What factors contributed to the growth in Pune's office leasing?
The growth in Pune's office leasing is attributed to the completion of several large-scale IT parks and the city's growing appeal as a cost-effective alternative to Mumbai for corporate expansion.
Which sector dominated the office leasing market in H1 2025?
The IT-ITeS sector dominated with a 29% market share in office leasing.
What was the percentage increase in new office supply in H1 2025?
New office supply increased by 25% to 24.51 million square feet in H1 2025.
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