New office space supply in India’s major cities has seen a significant decline, particularly in key markets like Delhi-NCR and Mumbai, according to a recent report by real estate consultant Colliers. Despite robust demand for prime workspaces, the availability of new office space dropped sharply in 2025. The report highlights that while some cities experienced a decrease in supply, others like Bengaluru and Chennai saw notable increases, reflecting a mixed landscape in the commercial real estate sector.
Decline in Office Supply in Major Cities
Colliers’ report reveals that new office supply in Delhi-NCR fell by 15% in 2025, dropping to 7.4 million square feet from 8.7 million square feet the previous year. Mumbai faced an even steeper decline, with new supply plummeting by 37%, falling from 8.3 million square feet to just 5.2 million square feet. Other cities reported similar declines; Hyderabad saw a 21% drop in new office space, while Kolkata experienced a staggering 80% decrease, with supply dropping to a mere 0.1 million square feet. This trend indicates a tightening market, as demand for office space continues to outstrip available supply.
Growth in Certain Markets
In contrast to the declines in Delhi-NCR, Mumbai, and other cities, Bengaluru, Chennai, and Pune reported positive growth in new office completions. Bengaluru experienced a 15% increase, with new supply rising to 17.5 million square feet from 15.2 million square feet. Chennai more than doubled its new office supply, reaching 4.5 million square feet, while Pune saw a significant increase, with new supply jumping to 11 million square feet from 5.3 million square feet. Overall, the seven major office markets in India recorded a 5% rise in new office supply, totaling 56.5 million square feet in 2025, compared to 53.8 million square feet in 2024.
Strong Demand and Leasing Activity
Despite the decline in new supply, office leasing activity remained robust. Total absorption of office space increased by 6%, reaching 71.5 million square feet in 2025, up from 67.2 million square feet the previous year. Colliers noted that the demand for office space has led to a decrease in overall vacancy levels by 49 basis points. Additionally, average rental rates strengthened by up to 15% year-over-year across major cities. The technology sector and the banking, financial services, and insurance (BFSI) sector were identified as key drivers of this demand, alongside foreign firms establishing Global Capability Centres (GCCs) in India.
Investment Trends and REITs
The commercial real estate landscape in India is also witnessing increased activity from major developers such as DLF Ltd, Prestige Estates, K Raheja Group, and others. Currently, India has four office asset-backed real estate investment trusts (REITs), which include Knowledge Realty Trust, Mindspace Business Parks REIT, Brookfield India Real Estate Trust, and Embassy Office Parks REIT. Recently, the Bagmane Group from Bengaluru filed draft papers with the market regulator Sebi to raise up to Rs 4,000 crore through an initial public offering for its Bagmane Prime Office REIT. REITs serve as investment vehicles that allow investors to earn income from real estate without directly owning properties, further enhancing the investment landscape in India’s commercial real estate sector.
Digihunt is not a financial advisor and this is not investment advice.