Hyderabad reported 59.0 Mn sq ft of new completions and 48.5 Mn sq ft of absorption since 2020. The trend of new completions surpassing absorption for five consecutive years has led to a significant rise in vacant office stock. As of Q1 2025, the city holds 28 Mn sq ft of vacant stock, the highest among the top seven cities. Despite robust demand, the stock is expected to rise further in 2025 due to a strong pipeline of upcoming supply in the city.
However, pan-India construction activities slowed by 39% on quarter and 12% over the previous year, reaching 9.50 Mn sq ft in Q1 2025. This slowdown can be attributed to the absence of new supply in Hyderabad and minimal supply additions in Chennai, Mumbai, and Kolkata during Q1 2025.
Conversely, the first quarter 2025 witnessed sustained leasing activities across the top seven cities amid global macroeconomic uncertainty. As a result, absorption rose 34% in Q1 2025 compared to the same period a year earlier, reaching 17.96 Mn sq ft. This can be attributed to the significant increase in real estate activities in the western cities (Mumbai and Pune), with the share rising from 24% in Q1 2024 to 37% in Q1 2025.
Moreover, the sudden rise of artificial intelligence altered the growth trajectory of the IT industry. This could be substantiated by the continuous dominance of the IT-ITeS sector in the absorption. The sector accounted for 34% of the pan-India absorption in Q1 2025 and 36% in the previous quarter.
Shrinivas Rao, FRICS, CEO, Vestian, said, “India’s office market maintained its growth momentum in Q1 2025, driven by sustained demand across the major office markets in India. Even though the absorption decreased over the previous quarter, GCCs, IT-ITeS, BFSI, and Flex Spaces demand for office spaces is expected to swell in the forthcoming quarters.”
In Q1 2025, the office market saw varied performances across major cities in India. Bengaluru led with a strong absorption of 4.08 million square feet, showing a 56% year-on-year increase, though down 3% quarter-on-quarter. New completions in Bengaluru stood at 3.5 million square feet, slightly declining by 5% YoY but growing by 9% QoQ. Chennai experienced a sharp decline in absorption, down 52% YoY and 24% QoQ, with negligible new completions. Hyderabad saw a 17% YoY growth in absorption but a significant 43% QoQ drop, with negligible new supply. Mumbai also showed strong YoY growth in absorption at 60%, though it declined by 11% QoQ, with new completions dropping by 70% YoY and 86% QoQ. Kolkata had a notable YoY absorption increase of 44%, with a massive 289% QoQ rise, while new completions remained minimal. Pune saw a remarkable 276% increase in absorption YoY, with stable quarterly performance and a 71% YoY increase in new completions, which grew by 26% QoQ. The NCR region’s absorption grew by 51% YoY but fell by 21% QoQ, with a significant 100% YoY increase in new completions, which grew by 44% QoQ. Overall, the total absorption across these markets increased by 34% YoY but fell by 17% QoQ, while new completions dropped by 12% YoY and 39% QoQ.
In Q1 2025, Bengaluru led the pan-India office market with 4.08 million square feet in absorption, closely followed by Mumbai at 3.99 million square feet, while Kolkata recorded the lowest absorption at 0.23 million square feet, though it experienced impressive growth of 44% YoY and 289% QoQ. Bengaluru's share of pan-India absorption increased to 23% from 19% in the previous quarter, despite a slight 3% quarterly decline, while Mumbai's share rose marginally to 22%, despite an 11% QoQ decline. Pune saw the most significant YoY growth with a 276% increase in absorption, elevating its share from 5% to 15%, while Chennai faced the steepest YoY drop of 52%, shrinking from 25% to 9%. Bengaluru also led absorption by GCCs, capturing 39% of the market, reflecting a strong 39% QoQ and 119% YoY increase. Regarding new completions, Bengaluru again took the lead with a 37% share, followed by Pune with 31%. Bengaluru's share increased from 21% in Q4 2024, and Pune's share rose from 15%. New completions in NCR saw substantial growth, doubling to 2.6 million square feet compared to last year, with a 44% QoQ increase.
