India continues to be a dominant force in the Asia Pacific office markets, accounting for over 70% of the total office demand in Q3 2024. This growth has positioned India as the leader, far surpassing China, which saw just 17% of the total demand in the region. In the third quarter of 2024, India’s office leasing activity reached an impressive 17.3 million square feet, cementing its role as the top player in the market.

Bengaluru and Hyderabad Drive Office Demand

The demand for Grade A office space in India is largely driven by two cities: Bengaluru and Hyderabad. Together, they account for more than 50% of the total leasing activity in the country. The two cities have long been recognized as key tech hubs, attracting both domestic and international occupiers looking for premium office spaces. This trend shows no signs of slowing down, with rents expected to rise further due to the growing demand for high-quality, sustainable workspaces.

Rental Growth and Market Expansion

The Indian office market saw a significant uptick in rental rates in Q3 2024, with major cities experiencing up to 10% annual growth. This increase in rental rates reflects the market’s strong demand and expansion phase. According to Colliers India, the demand for premium office spaces remains robust, and rents are expected to continue rising in the coming months.

Growth Projections for 2025

Looking ahead, the Asia Pacific office market is projected to experience steady growth, with demand across key markets expected to rise by 10.7% YoY in Q3 2024, totaling 23.7 million square feet of leasing activity. This upward trajectory signals a positive outlook for the region’s office markets, particularly for countries like India, which continue to lead the charge in office leasing growth.

Indian Market Outlook for 2024

In 2024, India is expected to absorb between five to six million square meters (approximately 54-64 million square feet) of Grade A office space. The new office supply in India for Q3 2024 has been aligned with the growing demand, with Bengaluru and Hyderabad contributing to 64% of the new completions. This indicates a well-balanced market, with supply and demand working in harmony to meet the needs of occupiers across sectors.

Key Drivers of Leasing Growth

Several factors are driving the growth of office leasing in India. Occupiers’ preference for high-quality, sustainable office spaces is at the forefront of this demand. With businesses increasingly focusing on green building certifications and sustainable practices, Indian office markets are seeing a surge in demand for spaces that offer modern amenities and energy-efficient designs. Cities like Bengaluru and Hyderabad are well-positioned to meet these demands, making them attractive destinations for global companies.

Global Trends and India’s Leadership

India’s continued dominance in the office leasing market comes as part of a broader trend in the Asia Pacific region, where countries like India, New Zealand, and Singapore have all seen significant leasing growth. In particular, India stands out, with a projected absorption of 54-64 million square feet of Grade A office space in 2024. This strong performance underscores India’s emergence as a leading player in the global real estate market.

Future Outlook for India’s Office Market

As demand for premium office spaces remains strong, particularly in Bengaluru and Hyderabad, India’s office market is poised for continued growth in the coming years. With increasing demand for sustainable and high-quality office spaces, India is set to remain a key market in the Asia Pacific region, with expectations for sustained rental growth and leasing activity.

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