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India outperformed the APAC office market in Q1 2025, with cities like Bengaluru, Mumbai, and Delhi-NCR showing impressive leasing activity despite a regional decline in prime office rents. This exceptional performance was driven by sustained domestic demand and the growth of Global Capability Centres (GCCs). Flex space demand surged by 28%, primarily due to startups and SMEs Vacancy rates differed among Indian cities, yet the constrained supply in India and Southeast Asia contributed to the stabilization of regional vacancy levels. Experts anticipate continued growth in India's office market, supported by infrastructure development and fresh supply in key cities.
India led the performance of the APAC office market in the first quarter of 2025, as detailed in a report by Knight Frank. Despite a regional decline of 0.9% in quarter-on-quarter (Q-o-Q) prime office rents, cities such as Bengaluru, Mumbai, and Delhi-NCR in India demonstrated remarkable leasing activity. This upward path was underpinned by strong domestic demand and the continuous expansion of Global Capability Centres (GCCs). Advertisement
Leasing volumes in India's top three office markets reached an impressive 1.7 million square meters in Q1 2025, setting India apart from other markets in the region. This performance contrasts sharply with cities like Shanghai and Hong Kong, where rents are declining and vacancy rates are rising. In India, Delhi-NCR reported a vacancy rate of 11%, while Bengaluru followed closely at 11.2%. Nevertheless, Mumbai saw a higher vacancy rate of 17.6%, driven by a significant influx of new supply into the market and a more cautious approach to leasing.
In India and Southeast Asia, the tightening of supply helped stabilize regional vacancy rates, while cities in China saw increasing vacancies. Bengaluru maintained its dominance in GCC-driven leasing, accounting for 65% of all activity in this sector. This trend solidified Bengaluru's position as the country's hub for technology and innovation. Meanwhile, Mumbai faced a softening in rents as landlords focused on maintaining occupancy in anticipation of significant new supply arriving in 2025. Simultaneously, the demand for flexible office spaces surged, with operators reporting a 28% year-on-year increase, largely fueled by startups and SMEs.
According to Shishir Baijal, Chairman and Managing Director of Knight Frank India, India's office market stands out in the Asia-Pacific region due to its resilience in the face of global challenges. The ongoing momentum from GCCs, domestic confidence, and the expansion of the co-working sector have been central to this success. Baijal anticipates continued growth in India's office market, bolstered by infrastructure developments and new supply, particularly in Mumbai and Delhi-NCR.
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