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Key Points

India's office market is showing strong momentum with declining vacancy rates. GCC expansion and robust domestic demand are driving 34.5 million square feet of absorption in the first half of 2025. Hyderabad has emerged as the top co-working destination while Pune leads in new supply. The market remains diversified across sectors with IT/ITeS, BFSI, and co-working spaces driving most of the demand.

Key Points: GCC Expansion and Domestic Demand Cut India Office Vacancy Rates

  • Vacancy rates declined by 210 basis points year-on-year
  • Hyderabad emerged as the top co-working destination nationwide
  • IT/ITeS sector led demand with a 24% market share
  • Pune and Hyderabad contributed 54% of total new office supply
2 min read

GCC expansion and strong domestic demand drive decline in office vacancy rates: CREDAI-CRE Matrix

CREDAI-CRE Matrix report shows India's office vacancy rates fell 210 bps as GCC growth and strong domestic demand drive 34.5 million sq ft absorption in H1 2025.

"The office market continued to show resilience in Q2 2025, driven by diversified occupier demand. - CREDAI-CRE Matrix Report"

New Delhi, August 30

The continued expansion of Global Capability Centres (GCCs), coupled with strong domestic demand, is driving a steady decline in office market vacancy rates, signalling renewed momentum in India's commercial real estate sector, according to the latest report by CREDAI-CRE Matrix.

The 'Office Market Report for Q2 CY'25' highlighted that vacancy rates declined by 210 basis points (BPS) between calendar Year (CY) 2024 and CY'25, underpinned by robust demand of 34.5 million square feet in H1 CY'25 and consistent absorption across major business hubs.

The report added that the ongoing shift towards flexible work models and strong domestic demand are also driving robust absorption rates across Bengaluru, Mumbai Metropolitan Region (MMR), Delhi-NCR, and Hyderabad. The office market absorbed 17.3 million square feet of fresh space during Q2 CY'25.

The office market continued to show resilience in Q2 2025, driven by diversified occupier demand. IT/ITeS led with a 24 per cent share, followed by BFSI (20 per cent) and co-working spaces (19 per cent). Hyderabad emerged as the top co-working destination, accounting for 29 per cent of the segment's demand and is poised to surpass the Mumbai Metropolitan Region in total office stock by the next quarter.

On the supply front, Pune and Hyderabad contributed 54 per cent of total new office supply, while Pune and Bengaluru together made up 40 per cent of total demand. In H1 CY'25, 28.8 million sq ft of new office space was added, with Pune alone accounting for nearly 30 per cent, reflecting a shift towards emerging markets and Tier-2 cities.

Delhi-NCR remained strong, with 4.9 million sq ft demand in H1 and 23 per cent QoQ growth, driven by BFSI, professional services, and healthcare. Despite a high vacancy rate of 20.8 per cent, leasing remained steady in Gurgaon and Noida.

Ahmedabad recorded 0.5 million sq ft demand in H1, with activity moderating slightly. However, the city continues to show long-term promise, backed by a 9.7 million sq ft Grade A pipeline and the rising influence of GIFT City as a BFSI and IT hub, the report added.

- ANI

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Reader Comments

P
Priya S
The shift towards Tier-2 cities like Pune and Ahmedabad is a positive development. It will help distribute economic growth more evenly across the country rather than concentrating everything in metros.
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Arjun K
While the numbers look good, I hope this growth translates into better infrastructure in these cities. Gurgaon and Noida already struggle with traffic and public transport - more offices will only add pressure.
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Sarah B
The flexible work model trend is here to stay! Companies are finally adapting to hybrid setups. Good to see co-working spaces getting 19% share - reflects the changing nature of work in India.
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Vikram M
GIFT City in Ahmedabad showing promise is excellent news! We need more financial hubs beyond Mumbai. This could really transform Gujarat's economic landscape in the coming years. 🚀
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Michael C
Impressive numbers - 34.5 million sq ft demand in H1 shows strong confidence in India's growth story. The diversified occupier base (IT, BFSI, co-working) indicates a healthy, balanced market development.

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