India Real Estate Latest Trends | Overview | Growth | Investments

May 15, 2024
The Rise of Commercial Real Estate in India: A Look at Top Office Markets

The commercial Real Estate Sector in India is experiencing a significant surge in demand, with key office markets witnessing substantial growth. According to recent surveys, cities like Bengaluru, Pune, the National Capital Region (NCR), and Mumbai have seen a remarkable increase in rental rates, signalling a strong rebound from the impact of the pandemic. Let’s delve into the details and understand what’s driving this growth and which markets are leading the way.


The Office Market Landscape in Q1 2024

In the first quarter of 2024, the Asia Pacific region witnessed a notable trend: occupiers showed a willingness to pay higher rents for better-quality workspaces, despite their cost-conscious mindset. Key findings from the office market study include:


  • High-quality new office spaces attract up to 20% greater rental premiums than average quoted prices in select premium micro markets.
  • Global Capability Centers (GCCs) are driving India’s office space demand, accounting for 37% of total lease activity in Q1 2024.
  • Bengaluru and Hyderabad dominated office market activity, accounting for over half of lease and three-fourths of supply in the first quarter of 2024.
  • Despite a strong demand-supply equilibrium, vacancy levels remained steady.
  • Rental rates surged by up to 8% year-on-year across key markets.
  • Global firms captured a significant 61% share in office leasing.

Rental Rises in India’s Leading Office Markets

Rentals in India’s top office markets have increased by 4-8% annually. This growth can be attributed to strong demand and an increase in high-end, quality office supplies. After experiencing a downturn during the pandemic due to low demand, occupant exits, and remote work habits, rentals have bounced back in 2024, nearing pre-pandemic levels.


Reasons for Increased Willingness to Pay

Occupiers are now prioritising sites that are conducive to talent acquisition. India’s excellent office market performance is a result of sustained economic growth and improved occupier confidence. Specific high-performing markets in the top six cities have witnessed annual rental growth of up to 20%.


In reaction to changing market circumstances, office occupiers in India are modernising their cost-cutting methods by adopting the hub-and-spoke model, growing flex space portfolios, and using technology. Suburban and peripheral areas that offer affordability are seeing increased demand, indicating a desire for sub-dollar or near-dollar markets.


Examples of High-Performing Markets

  • MG Road, Delhi NCR: 18.2% annual growth.
  • SBD 1, Bengaluru: 15.5% annual growth.
  • Pallavaram Thoraipakkam Road (PTR) in Chennai: 10.9% annual growth.

City-wise Snapshot



  • In Q1 2024, Outer Ring Road dominated leasing, with North Bengaluru leading in supply, accounting for more than half.
  • The Engineering & Manufacturing industry dominated leasing activity, accounting for 39% of the total, thanks to major transactions.
  • Rentals were constant, providing occupiers with a variety of options throughout the city.



  • Office leasing moderated to 1.5 million square feet in the first quarter of 2024, with 47% of demand coming from OMR Zone 1 and MPR micro-markets.
  • The Engineering & Manufacturing industry witnessed a 28% YoY increase in leasing activity, outpacing the Technology sector.
  • Vacancy levels are likely to stay constant despite strong demand and supply dynamics.



  • Gurugram’s Golf Course Extension Road saw the largest space take-up, accounting for 0.7 million sq ft (28% of total leasing).
  • Technology firms dominated leasing, experiencing roughly a 3X rise in gross absorption compared to the previous year.
  • Vacancy fell, and rentals rose by around 9% in Q1 2024 due to high demand and limited new supply.



  • Space uptake grew 2.2 times in Q1 2024 compared to Q1 2023, driven by the healthcare and technology industries.
  • Hi-tec City accounted for 80% of overall office leasing in the quarter.
  • Vacancies remained steady despite high demand and supply performance.



  • The most active micro-markets were Navi Mumbai and Goregaon/Malad, contributing to about half of total absorption in Q1 2024.
  • BFSI players dominated demand with 39%, while Flex space accounted for 15%, exceeding the Technology sector.
  • Vacancy levels fell by 460 basis points year on year due to limited new supply and strong demand.



  • The technology sector experienced a strong 3.3X YoY increase, indicating a significant recovery.
  • Viman Nagar had the highest leasing rate at 25%, driven by BFSI, Technology, and Engineering & Manufacturing occupiers.
  • Most markets had rental growth of 3-5% year on year.
  • Vacancy rates rose due to lower space demand and increasing supply infusion.


Flex Spaces and Next Trends

The flex space category has grown dramatically, with 8.7 million square feet leased by 2023. Flex spaces are likely to sustain their momentum in 2024, accounting for 15-20% of total office leasing across the top six cities. This highlights occupiers’ desire for nimble, cost-effective workspace solutions.

Furthermore, new office supply with better construction and high-end facilities are often priced up to 20% more than regular rentals in select premium micro markets.


GCCs and Their Impact

Global Capability Centers (GCCs) are offshore entities set up by multinational organisations to execute a variety of strategic functions. In India, GCCs contributed to 37% of overall office leasing in the March quarter. Forecasts indicate that they will lease 45-50 million square feet over the next two years.

GCCs are preferred by international firms due to India’s cost-competitiveness, IT skills, and ability to innovate at scale. Additionally, India’s startup ecosystem and booming IT industry have made digital skills more accessible in the country, further driving the growth of GCCs and the office market as a whole.

In conclusion, India’s commercial real estate sector is witnessing a significant uptick in demand, with cities like Bengaluru, Pune, NCR, and Mumbai leading the way. The rise in rental rates, fuelled by strong demand and an increase in high-quality office supplies, is indicative of a robust recovery from the impact of the pandemic. With trends such as the growth of flex spaces and the increasing presence of GCCs, the future of India’s office market looks promising.


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