Kolkata's commercial real estate sector has shattered records, delivering its most robust performance in more than ten years during 2025. According to the latest data from Knight Frank India, the city's office market witnessed an unprecedented surge in demand, fundamentally altering its landscape.
Office Market Skyrockets on Flex and IT Demand
The annual leasing volume for office spaces in Kolkata catapulted by a staggering 69% year-on-year, reaching 2.3 million square feet. This is the first time the market has breached the significant 2 million square feet threshold. The momentum was not confined to the early part of the year; the second half of 2025 saw an even sharper rise of 78% in leasing activity compared to the same period in 2024.
This explosive growth was primarily fueled by two key sectors: flex space operators and IT services companies. Geographically, the action was concentrated in two major hubs, with Salt Lake City and Rajarhat New Town accounting for over 95% of all leasing deals in the city. A critical factor tightening the market was the continued lack of new office supply, which pushed vacancy rates down by 624 basis points to 29.9%.
The supply crunch and soaring demand naturally translated into higher prices. The average monthly office rent in Kolkata climbed 16% to reach Rs 47.5 per square foot. Notably, this rental growth was the highest among the eight major Indian markets monitored by Knight Frank India.
Structural Shift Towards Large, Flexible Deals
Joydeep Paul, Senior Director (Occupier Strategy and Solutions, Kolkata) at Knight Frank India, highlighted a significant trend. He pointed out that the city witnessed its highest annual transaction volume in a decade, with the top 10 deals making up nearly 45% of the total leasing activity. "This signals a structural shift toward flexible and technology-driven workplace strategies," Paul stated.
Residential Market Holds Steady with Improved Health
While the office segment boomed, Kolkata's residential market demonstrated resilience and consolidation. The Knight Frank India ‘India Real Estate’ report for the second half of 2025 positions Kolkata as a market that successfully balances growth with affordability. It retains its status as the country's second most affordable residential market, with an affordability index of 22%.
Full-year residential sales saw a slight moderation of 3%, settling at 16,896 units. However, the latter half of the year showed promise with a 7% year-on-year increase in sales. More importantly, new project launches rebounded strongly in H2 2025, posting a 38% growth, though annual launches were down 6% at 15,780 units.
Key indicators of market health showed meaningful improvement:
- Unsold inventory dropped by 5% to 19,630 units—the lowest level in ten years.
- The Quarters-to-Sell (QTS) metric improved to 4.6 quarters, indicating faster absorption.
- Residential prices appreciated by 6% year-on-year to an average of Rs 4,037 per square foot.
Demand continued to be driven by end-users, with a focus on homes priced between Rs 5 million and Rs 20 million. While the affordable segment (below Rs 5 million) maintained steady interest, its share of new launches fell to 35% in 2025 as developers pivoted towards mid-range and premium offerings. The luxury segment priced above Rs 20 million remained a resilient niche.
A Model of Sustainable Growth
Commenting on the overall market dynamics, Joydeep Paul added, "Kolkata has managed to stay steady and remain affordable for homebuyers. This balance between growth and affordability is rare in today's real estate cycle and positions Kolkata as a highly sustainable, value-driven market for the long term." The city's real estate narrative in 2025 is thus one of a commercial sector reaching new peaks while its residential counterpart offers stability and value, creating a unique and compelling investment story.
