India Office Rents Rise 3.8% in Q2 2025: IIMB-CRE Index

India’s commercial real estate market continues to flex its post-pandemic strength. According to the latest IIMB–CRE Matrix Commercial Property Rental Index (CPRI) for Q2 2025, Grade A and A+ office rentals across major Indian cities rose by 3.8% year-on-year. The surge was led by Mumbai, Gurugram, and Delhi, three cities that together define the country’s corporate geography.

The index, developed jointly by the Indian Institute of Management Bangalore (IIMB) and data analytics firm CRE Matrix, has become the country’s most credible yardstick for tracking real rental movements in the top ten office markets. These include Bengaluru, Hyderabad, Mumbai, Gurugram, Pune, Chennai, Noida, Navi Mumbai, Delhi, and Thane together representing more than 90% of India’s institutional-grade office inventory.

A more accurate measure of real rent trends

Unlike conventional rental indices that rely on ‘headline’ figures, often inflated or distorted by marketing incentives, the IIMB–CRE Matrix Index measures effective rents. These account for real-world lease conditions such as rent-free periods, extra security deposits, and other concessions that can distort actual payments. In other words, the index reflects what tenants truly pay over time, not what’s quoted on paper.

Using granular, lease-level data from the CRE Matrix database, the index employs a spatio-temporal Bayesian model to fill gaps where transactions are limited, ensuring each market’s movement is captured accurately. The base year is Q1 2014, with the index value set at 100.

This methodology, says the IIMB team, makes it nearly ‘ungameable.’ “We had taken some additional time this quarter to tighten our data definitions, so our index continues to remain robust in a dynamic market like India,” said Prof. Venkatesh Panchapagesan, Chairperson of the Real Estate Research Initiative (RERI) at IIM Bangalore. “The fact that our index is less likely to be gamed makes it the most accurate representation of the commercial office rental market in India. We hope CPRI will become the go-to benchmark for landlords, tenants, and investors in REITs.”

Mumbai, Delhi and Gurugram stay ahead of the curve

In Q2 2025, Mumbai emerged as India’s top performer with a quarterly rental growth of 3.6%. The city’s commercial heart—especially its Central Business District (CBD)—has shown remarkable consistency over the years. In fact, CBD Mumbai has posted an exceptional compound annual growth rate (CAGR) of 9.6% over the last five years, reinforcing its position as the nerve centre of India’s financial ecosystem.

Delhi, on the other hand, led in annual growth, with rents soaring 16.4% year-on-year. The report attributes this spike to the shortage of premium, Grade A office spaces in the capital. As high-quality supply tightens, the existing inventory continues to command steep premiums, driving average rents to new highs.

Gurugram, part of the National Capital Region’s thriving office belt, also stood out with quarterly rental growth of 3.2% and a robust 8.1% increase over the past year. The city’s ability to attract multinational tenants, flexible workspace operators, and tech firms continues to anchor its position as one of India’s most dynamic commercial markets.

Regional bright spots: Chennai, Navi Mumbai, and Bengaluru

While the traditional metros continue to dominate, the index highlights several regional surprises. Chennai’s northern suburbs recorded a sharp 9.8% quarter-on-quarter rise—the highest in India this quarter. This signals how office demand is now spreading beyond established business districts as tenants seek modern, cost-efficient alternatives.

Navi Mumbai, often considered Mumbai’s quieter cousin, has quietly become one of India’s most resilient post-pandemic office markets. The city clocked a three-year CAGR of 9.0%, the fastest among all tracked regions. Its proximity to Mumbai, improving infrastructure, and comparatively lower rentals have made it a magnet for companies expanding in the western corridor.

Bengaluru, long considered India’s tech capital, continued to demonstrate its enduring appeal. Whitefield, the city’s largest office submarket, grew by 8% in Q2 and now holds the highest rental index value (243) of any macro-market in India. That number isn’t just symbolic—it reflects both the depth of tenant demand and the limited availability of high-quality supply.

Data-driven clarity for a complex market

The CPRI is not just an academic exercise. For policymakers, real estate developers, institutional investors, and researchers, it offers a scientifically grounded tool for understanding where India’s office markets are heading—and why. By stripping away distortions, the index helps clarify the link between tenant demand, urban growth, and economic recovery.

Abhishek Kiran Gupta, CEO and Co-founder of CRE Matrix, said the collaboration is unique even by global standards. “The IIMB–CRE Matrix is globally the only index that cuts through distortions to show real rent trends based on actual registered transactions in the office real estate segment,” he noted. “Bengaluru’s Whitefield and Chennai’s northern suburbs’ sharp quarterly uptick tell us that tenant demand is spreading beyond the traditional CBDs.”

Why the findings matter

The results from Q2 2025 reaffirm that India’s office real estate story is one of recovery and expansion. Hybrid work models, once feared to shrink demand, now appear to be stabilizing, with companies reconfiguring, not abandoning office spaces. Financial services, technology, and professional consulting firms remain the major demand drivers.

At a time when global office markets face headwinds from oversupply and falling demand, India’s steady rental appreciation underscores its relative economic resilience. For global investors looking at emerging markets, such granular and scientifically validated data provides a level of transparency that was previously missing.