Almost Two-Thirds of Anticipated Office Supply in 2025 expected in Integrated Tech Parks

New Delhi, March 26, 2025: India’s office sector is expected to maintain its strong growth momentum in 2025, says real estate consulting firm CBRE South Asia Pvt. Ltd its report titled ‘2025 India Market Outlook’. The report highlights key trends and projections for the Indian real estate sector. This growth is likely to be driven by resilient economic fundamentals, a firm employment outlook, readily available talent pool, and favourable government policies, including relaxation of SEZ denotification norms, boosting occupiers’ confidence in expanding their real estate portfolios.

The office sector has witnessed healthy supply growth over the past few years and is anticipated to maintain this momentum in 2025, underpinned by a robust pipeline of under-construction projects. Development completions would primarily be led by high-quality investment-grade assets, with ~60-65 per cent of the new supply likely to be a part of integrated tech parks within top cities during the year. Developers are increasingly focusing on fully amenitised, green-certified assets in line with occupiers’ evolving preferences.

While established hubs such as Bengaluru, Hyderabad, Delhi-NCR, and Mumbai remain highly attractive, other key cities such as Chennai and Pune are poised to gain further traction due to the influx of strategically located quality supply, readily available talent pool, and occupier strategies focused on diversifying beyond gateway markets. This trend is also likely to stimulate leasing activity in tier-II cities.

Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said, “India’s economic outlook remains positive, demonstrating resilience despite persistent global economic uncertainties. Stabilising inflationary trends have enabled the RBI to reduce the key policy rate in February, while further repo rate adjustments could be anticipated in the subsequent quarters.

The country’s office sector, having experienced record-breaking leasing performance in 2023 and 2024, is poised for sustained momentum in 2025. India’s abundant skilled talent pool continues to attract multinational corporations seeking to establish or expand their global capability centres (GCCs) and domestic enterprises looking to enhance their office footprint. With a strong pipeline of high-quality, investment-grade assets slated for completion during the year, the market is expected to witness an influx of fully amenitised, green-certified spaces that align with evolving occupier preferences.”

Indian Office Sector Trends for 2025

• Premiumisation on the agenda for developers and occupiers

Developers are adapting to the changing demands of contemporary businesses by focusing on cutting-edge facilities and extensive amenities. These include convenient access to public transportation and pedestrian-friendly surroundings, superior architectural designs, outdoor green spaces with optimal air quality, a variety of food and beverage choices, and community-building events. The growing number of large-scale buildings indicates a shift towards integrated or mixed-use developments, which aim to provide a comprehensive environment for both work and personal life.

• Leasing surge set to persist for India Inc.

Domestic firms demonstrated a robust resurgence in office leasing during 2023-2024, with ~86% increase compared to the pre-pandemic period (2018-2019), fuelled by increased business confidence, expansion of businesses, and digitalisation. As per CBRE’s 2024 India Occupier Survey, 78% of domestic occupiers plan to expand their portfolios by 10% or more within the next two years. This strong appetite for quality office real estate is anticipated to continue as firms pursue growth through strategic expansion into new markets.

Building on their 2024 momentum, flexible space operators are expected to maintain strong growth, driven by sustained end-user demand, as occupiers prioritise agility and flexibility within their real estate portfolios and leases. Domestic technology firms, seeking access to broader talent pools and geographically diversified risk profiles, are projected to drive office leasing activity significantly. Similarly, domestic banks are anticipated to expand their office footprints to support the growth of their technology-integrated services, sales, and customer support teams.

• Multi-sectoral demand to add to market strength

India’s robust corporate expansion across diverse sectors is poised to further stimulate multi-sectoral office space leasing activity nationwide. The technology sector is expected to lead demand, with hiring anticipated to be concentrated in specialised domains such as artificial intelligence, machine learning, data analytics, cloud computing, among others. Furthermore, the inherent strength and continued expansion of the BFSI and E&M sectors, coupled with their focus on digitalisation and developing new service offerings, are expected to contribute to office leasing demand.

• GCC leasing expected to ramp up

Leveraging India’s extensive talent pool, global firms are increasingly positioning their GCCs as strategic hubs / second headquarters, driving innovation, digital transformation, and the development of high-value capabilities. Expansion into multi-functional centres, consolidation of existing GCCs, and the entry of newer firms are expected to contribute to the country’s GCC leasing activity. In 2025, CBRE anticipates GCCs to account for ~35-40% of the total office space absorption across top cities.

Top Trends in Capital Inflows 2025

• Real estate capital inflows set to remain strong

Building upon the exceptional investment activity of 2024, total capital inflows are projected to maintain positive momentum in 2025. This projection is supported by strong interest from both domestic and international funds, substantial dry powder available for deployment in the office and industrial and logistics (I&L) sectors, and robust acquisition pipelines, particularly for retail assets and residential development sites. Government reforms, corporate restructuring, and improving macroeconomic conditions are expected to stimulate growth in India’s mergers and acquisitions (M&A) and private equity (PE) landscape, thereby potentially attracting foreign investments despite prevailing global uncertainties. The recent correction in the public markets presents a strategic opportunity for investors, as the realignment of seller-buyer valuation expectations typically creates a more conducive environment for capital deployment.

• Office sector anticipated to witness patient capital inflows

India’s office sector is poised for an upswing in investment activity in 2025, encompassing investment grade and semi-investment-grade assets. Several prominent domestic fund houses are actively pursuing acquisitions of office assets with a value-added approach and are anticipated to continue their efforts towards capital raising and deployment. While globally, institutional investor interest in office investments has been largely subdued, India presents a notable exception, evidenced by the remarkable 4X Y-o-Y growth in foreign institutional inflows observed in 2024. Global funds are anticipated to begin exploring opportunities in the country’s office market during H1 2025, with several transactions expected to be finalised in the second half of the year.

• Mixed investment strategies likely to maintain momentum

Growth / controlling stakes and the implementation of credit strategies are expected to maintain momentum in 2025, following numerous such transactions observed in the previous year. These mixed-investment strategies underscore investor confidence and long-term commitment to the Indian real estate market.

• Unlocking potential: The rise of small and medium REITs

Small and medium real estate investment trusts (SM REITs) in India offer a flexible listing option for individuals or small asset portfolios (up to INR 500 crore), unlike traditional REITs requiring larger portfolios. This structure facilitates phased listings, accelerating the process and providing a viable exit strategy for mid-sized asset developers who often struggle to attract large funds or find buyers beyond strata sales. Their success, however, depends on delivering competitive returns, preferably exceeding what is typically observed in strata sales. This performance level is expected to stimulate investor interest and broader market adoption for SM REITs in 2025 and beyond.