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Informist, Thursday, Jul. 3, 2025

 

KOLKATA – Despite global economic uncertainties, home prices and office rentals in all major Indian cities increased during Jan-Jun, on account of a spurt in sales of premium category homes and falling vacancy rates in offices.

 

Mumbai, which commands the highest rates in home sales and office rentals, saw a rise of 8% on year in average rates of homes per square feet at INR 8,532, while office rental increased 12% on year to INR 129 per square feet per month. In Bengaluru, where rates are the second-highest in home purchases and office rentals, the price of homes per square foot increased by 14% on year to INR 7,052 and office rent increased by 7% on year to INR 95 per square feet per month, according to the flagship report of Knight Frank India christened "India Real Estate: Office and Residential Market – January to June 2025" which was unveiled Thursday.

 

In course of launching the report online, Shishir Baijal, the chairman and managing director at Knight Frank India, said, "The residential market in H1 (Jan-Jun) 2025 reflected a nuanced shift where premium and luxury segments continued to thrive, even as lower value segments showed signs of continued moderation."

 

Homes priced above INR 10 million constituted nearly half of the 170,201 units sold during Jan-Jun, registering a 17% on-year sales growth. However, sales of homes priced below INR 10 million decelerated. Mumbai remained the largest residential market in the country by sales volume with sales remaining stable on year at 47,035 units. However, sales volume of residential units declined 8% on year at 26,795 units in Delhi-National Capital Region and fell by 3% in Bengaluru to 26,599 units. Among major cities, only Chennai saw a positive sales volume growth of 12% on year at 8,935 units sold.

 

Baijal, however, said the Reserve Bank of India's cumulative 100-basis-point policy rate cut and improved liquidity among people may further the housing demand, especially at the lower and mid value categories where sales were impacted negatively in Jan-Jun.

 

In the commercial real-estate market, total office space absorption surged 41% on year to an unprecedented 48.9 million square feet, marking the highest-ever half-yearly volume recorded across the country, Baijal said. This record performance was driven largely by Global Capability Centres, which accounted for 55% of Bengaluru's transacted volume. Pre-commitments constituted 46% of the space absorbed in the technological capital of the country, highlighting the supply-demand gap in ready-to-occupy stock and the urgency among occupiers to secure future space, according to the "India Real Estate: Office and Residential Market – January to June 2025" report.

 

According to the global property consultant, half of the major eight cities in the country scaled record highs in terms of commercial space volumes transacted in Jan-Jun. Bengaluru saw a record transaction volume, accounting for 18.2 million square feet or 37% of the total transacted volume of 48.9 millon square feet in the country. Occupier traction was spurred largely by Global Capability Centres which accounted for 55% of Bengaluru's transacted volumes.

 

The Delhi-NCR region, Pune and Kolkata were the other cities that scaled new highs as well. Transaction volumes in Kolkata exceeded 1 million square feet for the first time ever in any half-yearly period. Mumbai and Ahmedabad were the only markets that saw a drop in transaction volumes, but this can be attributed largely to a pronounced base effect rather than any slowdown in these markets, according to the report from Knight Frank India.

 

"The sustained demand for high quality office spaces owing to occupiers' confidence, has propelled transaction volumes to historic highs. As we move forward, India's strategic appeal and innovative spirit will continue to position it as a global leader in the office market," Baijal said.

 

Since 2021, new office completion has consistently trailed robust leasing demand, compressing vacancy rates from 17.2% to 14.7% during Jan-Jun, according to Knight Frank India. Further, most of the prime office areas like Central Business Districts and Secondary Business Districts have low single digit vacancies that has further fuelled a rise in rental values for Grade A office spaces.

 

This ongoing demand-supply imbalance has shifted market dynamics in favour of landlords, resulting in upward pressure on rents despite global market uncertainties. All major Indian office markets recorded rental growth, with Mumbai leading at 12%, Delhi-NCR at 8%, and Bengaluru at 7%.

 

Knight Frank India, in its report said that during Jan-Jun, there was an exceptional expansion in the flexible workspace segment, with operators leasing 10.2 million square feet which is a 43% increase over the previous year and the highest ever recorded for a six-month period. Co-working spaces accounted for a substantial 76% of total flex space absorption, well above the 63% average observed since Jan-Jun 2023. End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Avishek Rakshit

Edited by Akul Nishant Akhoury

 

 

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