India’s office market set for record growth as leasing hits new high: ICRA

India’s office real-estate sector is heading into one of its strongest phases yet, with rating agency ICRA (Investment Information and Credit Rating Agency of India Limited) forecasting record net absorption of 69-70 million sq ft across the top six office markets in FY2026. The strong momentum is expected to continue in FY2027, with leasing likely to stay above 65 million sq ft.

The sector is witnessing a rare shift where demand is consistently outpacing new supply for the third year in a row. As a result, vacancy levels, which indicate unoccupied office space, are projected to drop to 12-12.5% by March 2027, the lowest seen in years.

This follows a robust FY2025, when net absorption rose to 66 million sq ft, a 15% jump year-on-year. The pace remained firm in the first half of FY2026, with 36 million sq ft of space absorbed, higher than the 30.6 million sq ft of new supply. Vacancy levels have already fallen from 15.6% in March 2024 to 13% by September 2025, reflecting steady demand despite global uncertainties.

According to Anupama Reddy, Vice President and Co-Group Head at ICRA, much of this growth is driven by the rapid expansion of Global Capability Centres (GCCs), flex-space operators, and the Banking, Financial Services and Insurance (BFSI) sector. Even with policy tightening in the US and shifting trade conditions, leasing by GCCs in India has remained strong.

GCCs alone are expected to lease 50–55 million sq ft between April 2025 and March 2027, contributing nearly 40% of total incremental demand. They already accounted for 35-37% of net absorption during FY2024-FY2025, supported by state-level incentives and improved urban infrastructure.

City-wise, Bengaluru retains its leadership, with vacancy expected to fall to 7.5-8% by March 2027. Chennai will see vacancies dip further to 5.5-6%, while Delhi-NCR is projected to improve gradually despite still having the highest vacancy levels. Hyderabad, Pune, and the Mumbai Metropolitan Region (MMR) will continue to show stable or improving demand.

ICRA also outlines the broader fundamentals boosting India’s office market. India’s low operating costs give global firms a significant financial advantage when expanding here compared to other international office hubs. The country’s large and skilled talent base, particularly in technology and finance, remains one of its biggest draws.

India’s scalable technology infrastructure, with modern IT parks and strong digital connectivity, enables companies to grow quickly and efficiently across major cities. Additionally, sustained policy support from state and central governments, including incentives, infrastructure development, and business-friendly regulations, has created a strong ecosystem for investment.

With vacancy levels projected to reach historic lows and financial health improving across developers, ICRA maintains that India’s commercial office market will continue to attract both domestic and global investors. The agency will keep monitoring macroeconomic and geopolitical trends but says the outlook for FY2026 and FY2027 remains strong and stable.