A significant mismatch between supply and demand is reshaping India's prime office markets, with new construction failing to keep pace with robust leasing activity. According to data from real estate consultant Colliers India, key property hubs like Delhi-NCR and Mumbai witnessed a sharp decline in new office space completions in 2025, even as companies continued to snap up premium workspace.
Supply Contraction in Major Metro Hubs
The data reveals a stark picture in India's traditional commercial capitals. Delhi-NCR saw a 15% annual decline in new office supply, which fell to 7.4 million square feet from 8.7 million square feet in 2024. The drop was even more pronounced in Mumbai, where fresh supply plunged by 37% to 5.2 million square feet, down from 8.3 million square feet the previous year.
Other southern markets also saw a pullback. Hyderabad recorded a 21% fall in new supply to 10.8 million sq ft, while Kolkata experienced a dramatic 80% contraction to a mere 0.1 million sq ft.
Southern Cities and Pune Buck the Trend
In contrast, the cities of Bengaluru, Chennai, and Pune posted strong growth in new office completions, highlighting a shifting geographical dynamic. Bengaluru led with a 15% rise in supply to 17.5 million sq ft. Chennai's new supply more than doubled to 4.5 million sq ft, and Pune witnessed a more than two-fold jump to 11 million sq ft from 5.3 million sq ft.
Overall, the top seven markets—Bengaluru, Delhi-NCR, Mumbai, Hyderabad, Chennai, Pune, and Kolkata—collectively saw a 5% rise in new supply to 56.5 million sq ft in 2025, up from 53.8 million sq ft.
Strong Demand Tightens Market, Pushes Rents Up
Office leasing activity remained vigorous, with total absorption across these cities rising 6% to 71.5 million sq ft in 2025 from 67.2 million sq ft. This demand, consistently outstripping new supply, has led to a tightening market.
Overall vacancy levels fell by 49 basis points, and average rentals strengthened by up to 15% year-on-year across major cities, as per Colliers India.
The technology sector and the Banking, Financial Services and Insurance (BFSI) segment continued to be the primary drivers of office demand. A significant additional push came from foreign firms establishing Global Capability Centres (GCCs) in India, absorbing large chunks of premium office space.
REITs and Key Market Players
Major developers dominating the office segment include DLF Ltd, Prestige Estates, K Raheja Group, Embassy Group, Sattva Group, and RMZ Group. The market is also seeing growing institutional participation through Real Estate Investment Trusts (REITs).
India currently has four office asset-backed REITs:
- Knowledge Realty Trust (Sattva Group & Blackstone)
- Mindspace Business Parks REIT (K Raheja Group)
- Brookfield India Real Estate Trust
- Embassy Office Parks REIT
Recently, Bengaluru-based Bagmane Group filed draft papers with SEBI to launch the Bagmane Prime Office REIT, aiming to raise up to Rs 4,000 crore through an Initial Public Offering (IPO). REITs allow investors to earn income from real estate without direct property ownership.
The current market dynamics indicate a landlord-favourable environment in several key cities, with constrained supply and sustained demand from traditional and new-age sectors likely to keep rental values on an upward trajectory in the near term.
