Q2 2025 gross leasing reaches 20 mn sq ft, highest among all previous second quarter numbers, signalling the strong momentum and global confidence in the India office story
India's office market continues to demonstrate strong momentum despite significant global economic uncertainties and headwinds with gross leasing numbers hitting a new high of 39.45 mn sq ft in H1 2025 and up by 17.6% y-o-y. This was achieved on the back of a stronger-than expected Q2 with global firms leading the charge. They accounted for a strong 61.5% share in leasing volumes with India’s continued prominence as a global talent hub shining brightly.
In fact, Q2 2025 hit 20 mn sq ft in leasing volumes, marking the strongest-ever second quarter performance for any year. The market also outperformed expectations supported by the continued strength in domestic occupiers led demand who combined to lease 7.7 mn sq ft in Q2 2025. The year remains cumulatively on track for the strongest annual performance by domestic firms. This sustained demand reflects corporate India's confidence in long-term growth prospects and the country's strategic importance in multinational corporations' global footprints.
Demand for high-quality offices remains strong across the major metros, with Bengaluru leading the pack for the fifth straight quarter. As a matter of fact, Bengaluru had its second-highest quarterly leasing volumes ever after Q4 2024. The city accounted for a significant 37.6% share of the quarterly leasing activity. Delhi NCR followed with a 20.8% share. On a H1 comparison, all cities are higher or near-similar on a y-o-y comparison, barring Kolkata.
For Q2, Tech remained the leader in absolute leasing terms accounting for a 30.9% share, with Manufacturing and BFSI capturing the next two spots in terms of contribution, followed by Flex. Consulting firms were major movers this quarter, accounting for their biggest quarterly space take-up in Q2 2025.
GCCs are leading the charge in India’s office market and on a H1 comparison, leased more space in Jan-June 2025 than any previous calendar year. This follows the momentum from last year, when GCCs were the biggest occupier group by activity levels. GCCs in the BFSI and Manufacturing sectors have been the standout performers, accounting for a cumulative 55.6% share of the H1 leasing volumes. Bengaluru remains the gateway city for GCCs, accounting for over 41% of demand in H1 2025.
Third-party tech firms – both global and domestic are having a standout year so far. They have reimagined their delivery models with focus on high-value work around transformative technologies and with a better business outlook have combinedly leased 9.1 mn sq ft in H1 2025, already 75% of last year’s full year numbers.
The new office completions reached 14.8 mn sq ft during the quarter, representing a substantial rise of 40.6% q-o-q and a 30.8% rise y-o-y. Total net supply, which includes the addition of refurbished projects, increased to 16.9 mn s. f., marking a 65.1% jump from the previous quarter. Pune, Hyderabad, and Bengaluru dominated the new completions activity during the quarter for a combined 73.8% share. On a half-yearly basis, new completions stand at 25.3 mn sq ft during H1 2025, up by 29.2% compared to H1 2024.
On a y-o-y basis, net absorption was also up by 7.0% at 11.31 mn sq ft. This was also the strongest Q2 net absorption performance since 2011, indicating the continued headcount and footprint-accretive growth, which in turn is driven by India’s tech ecosystem and its inherent strengths.
Overall vacancy for the top seven cities was recorded at 16.1%, up marginally by 40 bps q-o-q but significantly lower by 90 bps on a y-o-y basis, indicating a healthy dynamic between new supply versus net absorption numbers. Vacancy in key office clusters remains in tight single digits.
The rental values on a y-o-y basis (Q2 2025 vs Q2 2024) have increased across all cities, with Hyderabad witnessing the maximum growth of 16.3%, followed by Kolkata and Bengaluru with a growth of 11.5% and 7.3%, respectively. Mumbai and Delhi NCR both have seen 5.8% growth, whereas Chennai and Pune have recorded 3.3% and 3.2% y-o-y rental growth, respectively.
India is a shining beacon on the international office market stage as it appears to be immune to the global uncertainties and headwinds. The market is tuned towards growth – across both headcount and real estate footprint metrics, even as robust office occupancies are already causing a space crunch in existing portfolios of large occupiers. The market currently is well-ahead of plan with H1 performance anticipated to take the country’s leasing volumes to unprecedented levels of 80 mn sq ft or even higher. On average, the country across the top seven cities has leased ~21 mn sq ft on average over the past four quarters.
Demand from GCCs – both existing ones and new country entrants remains strong, making up ~50% of all active space requirements. At a sector level, the resurgence in third-party tech along with strong space demand emanating from global BFSI firms for their offshoring hubs and manufacturing scripting strong demand levels driven by the policy ecosystem are key drivers for the long growth runway ahead.
As transaction volumes continue to surge, vacancy rates remain healthy, and development pipelines stay active, it paints a picture of a market operating in its own confident rhythm, driven by the fundamentals of its deep talent pool, innovation and costs.