India's office leasing for top-tier properties is predicted to surpass 50 million square feet by the fiscal year 2026, according to a report by Crisil Ratings.
India's commercial office space market is poised for substantial growth, with the net leasing of Grade A commercial office space projected to grow at a compound annual growth rate (CAGR) of 7-9% from 2019 to 2027, according to Crisil Ratings agency[2][4]. This growth is attributed to factors such as reduced remote work and strong demand from Global Capability Centres (GCCs)[2][4].
This healthy demand and supply dynamics are expected to improve occupancy levels significantly. The overall vacancy level for India's Grade A office market is anticipated to decline to 15.5-16.0% by the end of fiscal 2027, marking a 100 basis points improvement over fiscal 2025[2][4].
The strong demand is being driven by various sectors. The BFSI sector, in particular, is expected to drive double-digit growth in net leasing over the next two financial years[1]. Flexible workplace operators are also expected to expand, offering agile, cost-effective, and hybrid-friendly solutions to companies[1].
In terms of overall office stock, the annual supply is expected to be 53-57 million sq ft, leading to a 6.5-7% CAGR expansion during this period[2][4]. This growth will contribute to increased cash flows for commercial office developers and will help stabilize their credit profiles, as demand absorbs the elevated supply[2][4].
However, the net leasing by domestic companies in the IT/ITeS space remains low[1]. The net leasing growth by this sector is expected to remain moderate, with demand growing 5-6%[1]. The vacancy levels in the National Capital Region and the Mumbai Metropolitan Region may see a decline of 200-250 basis points[1].
Global Capability Centres (GCCs) account for 30-40% of annual net leasing of commercial office space in India[1]. The supply of commercial office space is expected to be 53-57 MSF annually[1]. By the next financial year, the net leasing of commercial office space is expected to exceed 50 Million Square Feet (MSF)[1].
Crisil Ratings director Gautam Shahi has stated that the overall vacancy level for India's Grade A office market is expected to decline[1]. However, the overall vacancy trend will vary across micro-markets[1]. The overall office stock is projected to expand to around 920-925 MSF by the end of fiscal 2027[1].
In conclusion, the Indian commercial office space market is set for robust growth, with improved occupancy levels and a steady supply of space. The demand from sectors such as BFSI and GCCs is driving this growth, and flexible workplace operators are also expanding to meet the changing needs of businesses. However, the IT/ITeS sector's growth remains moderate.
- The BFSI sector in India is anticipated to drive double-digit growth in net leasing for the next two financial years, contributing to the growth of the Indian commercial office space market.
- Flexible workplace operators are expanding in India, offering businesses agile, cost-effective, and hybrid-friendly solutions, further fuelling the growth of the Indian commercial office space market.
- Global Capability Centres (GCCs) account for a significant portion of annual net leasing of commercial office space in India, signifying their contribution to the growth of the Indian commercial office space market.
- By the next financial year, the net leasing of commercial office space in India is expected to exceed 50 Million Square Feet (MSF), indicating the steady growth of the Indian commercial office space market.
