Hyderabad: India’s office real estate market saw a marginal dip in leasing activity during the July–September 2025 quarter, but developers and consultants insist the weakness is cyclical rather than structural. Despite subdued numbers in the South, industry leaders maintain that demand fundamentals remain robust, supported by expanding Global Capability Centres (GCCs) and sustained corporate interest.
According to CBRE, gross office leasing across nine major cities declined 2.5 per cent year-on-year to 19.9 million sq. ft. from 20.4 million sq. ft. a year ago, driven mainly by a slowdown in Bengaluru, Hyderabad and Chennai. Bengaluru posted the sharpest decline, down nearly 40 per cent to 4.3 million sq. ft. In Hyderabad, the leasing activities declined by nearly 18 per cent to 2.2 million square feet from 2.6 million square feet. Chennai reported modest dip, while Delhi-NCR and Pune registered healthy absorption. According to Colliers India, Hyderabad is likely to witness a fall of 48 per cent in workspace demand to 15 lakh sq ft during the September from 29 lakh sq ft in the same period a year ago.
Knight Frank’s quarterly report showed a six per cent fall across eight major cities to 17.8 million sq. ft. but projecting record annual absorption. The consultancy attributed the short-term softness to global macroeconomic uncertainty and delayed decision-making among large occupiers, particularly in the technology sector.
Industry experts caution against reading too much into one quarter’s data. “One quarter cannot define market performance,” said Arani Sumanth Reddy, Chairman, National Association of Realtors (NAR) India. “Commercial transactions often take months to close. Deals initiated this quarter may conclude in the next, so reports like these rarely capture real-time momentum.”
He added that many smaller landlords and developers do not disclose leasing transactions, leading to gaps in reported data. “Without complete inputs, quarterly reports tend to distort market reality,” Reddy said.
Despite Bengaluru’s 40 per cent dip, Reddy termed the decline a ‘temporary fluctuation’ and reaffirmed the city’s position as India’s undisputed technology and innovation hub. “Bengaluru continues to dominate long-term office space absorption. The recent dip is simply a timing issue,” he noted.
In Hyderabad, Reddy pointed to strong underlying demand in Hitech City and Gachibowli, where vacancy levels remain among the lowest in India. “The market here is fundamentally tight. Rising rentals and sustained occupier interest clearly show strength,” he added.
Reddy also called for greater transparency and localization in research methodology. “Limited supply naturally constrains absorption. It’s inaccurate to label such conditions as weak demand. Global research firms must contextualize India’s micro-market variations better,” he observed.
Echoing similar views, Kavya Kavuri, Director, Kavuri Hills Developers and leader of the Credai Youth Wing, described the current phase as a “temporary correction.” She noted that record land auction participation and continued investor activity underline market confidence.
“The shift towards Grade A, sustainable and flexible workspaces is accelerating. Corporates are upgrading, not downsizing,” Kavya said. “Factors such as traffic congestion and higher housing costs in Bengaluru may have momentarily affected absorption, but the long-term story remains intact.”
She added that southern cities continue to attract GCCs and technology firms, while Pune and Mumbai are maintaining steady growth. “Pune is evolving into a global R&D hub, and Mumbai continues to see strong leasing in BFSI and consulting segments,” she said. Kavya expects mid-sized office spaces (20,000–30,000 sq. ft.) to see faster absorption as occupiers prefer agile, right-sized configurations.
On hybrid work trends, Kavya said collaboration and productivity are driving renewed interest in physical offices. “Companies are optimizing, not eliminating, workspace. Hybrid work is evolving towards balance — flexible layouts with in-office collaboration zones,” she explained.
Both CBRE and Knight Frank forecast a rebound in leasing momentum over the next few quarters, supported by steady GDP growth, global firms’ cost rationalization, and India’s growing stature as a strategic back-office hub.
Despite temporary headwinds, developers and consultants remain bullish on India’s commercial property market. Short-term dips, they argue, are the result of delayed closures, limited new supply, and cyclical adjustments rather than weakening demand.
