India’s commercial real estate sector has shown remarkable resilience and growth, with a substantial increase in office rentals across major metropolitan cities. According to a report released on May 27, 2025, by real estate consultancy firm Anarock, Mumbai Metropolitan Region (MMR), Hyderabad, and Delhi-NCR have emerged as the top three cities witnessing the most significant rental appreciation over the past two and a half years.

MMR Records 28% Increase, Leading the National Rental Surge

The Mumbai Metropolitan Region (MMR) has led the charge in office rental escalation, registering a staggering 28% rise, taking the average rent from Rs. 131 (US$ 1.54) per square foot in 2022 to Rs. 168 (US$ 1.97) in 2025. Despite the global economic uncertainties and widespread debates over hybrid work models, the demand for premium office spaces in MMR continues to soar.

A major contributor to this surge is leasing activity from US-based businesses, especially in the banking, financial services, and insurance (BFSI) sector. US firms now account for 48% of total leasing in MMR's BFSI domain. Overall, American companies occupy 45% of all office leasing in India, making them the largest international contributors to the Indian office market.

Hyderabad Shows Strong Growth with 24% Rise

Following closely, Hyderabad has experienced a 24.1% increase in office rentals, which currently stand at Rs. 72 (US$ 0.85) per square foot. This sharp rise highlights Hyderabad’s emergence as a major hub for technology and innovation. The city’s modern infrastructure, proactive policy environment, and deep talent pool have created the right ecosystem for tech-driven enterprises and startups.

Industry experts cite the growing interest from Global Capability Centres (GCCs), multinational firms, and co-working spaces as key catalysts in driving rental demand in the region. According to Mr. Kirthi Chilukuri, Founder & MD of Stonecraft Group, Hyderabad's performance reflects a shift towards future-ready workspaces, with businesses valuing the city’s scalable and tech-friendly environment.

Delhi-NCR Sees 20% Rental Upsurge Amid Business Optimism

Delhi-National Capital Region (NCR) has also seen a 20% growth in average office rent, now priced at Rs. 110 (US$ 1.29) per square foot. The resurgence in demand is attributed to the renewed push for in-person office attendance, enhanced infrastructure, and government-backed policy reforms that have created favourable conditions for businesses to expand operations.

The return-to-office trend, coupled with India’s fast-paced economic revival, has been pivotal in attracting large firms to Delhi-NCR’s Grade A commercial properties, further driving rent inflation.

Other Cities: Bengaluru, Pune, and Chennai See Moderate Growth

While MMR, Hyderabad, and Delhi-NCR dominate the rental surge chart, Bengaluru, often regarded as India’s Silicon Valley, recorded a 16% increase with current rentals at Rs. 95 (US$ 1.12) per square foot. This growth is led primarily by technology firms, flexible workspaces, and GCCs.

Mr. Shesh Rao Paplikar, CEO of BHIVE Workspaces, emphasized that Bengaluru’s increase reflects steady demand for tech-centric, flexible, and modern office environments, aligning with the city's legacy as a technology powerhouse.

Pune and Chennai, while not matching the rapid growth of the top-tier cities, posted 11.1% and 9.1% increases respectively, with average monthly office rentals at Rs. 80 (US$ 0.94) in Pune and Rs. 72 (US$ 0.85) in Chennai. These cities continue to appeal to businesses seeking cost-effective yet robust alternatives for setting up operations, especially in the manufacturing, IT, and logistics sectors.

Key Drivers Behind India’s Office Rental Boom

The sharp increase in office rentals can be traced to several underlying macroeconomic and sector-specific trends:

1. Return to Office Mandates: Many global and domestic corporations are shifting back to in-office work environments after extended periods of remote or hybrid work. This has resulted in increased demand for collaborative workspaces and prime office locations.

2. Growing Confidence in Indian Talent: The abundance of skilled human capital, especially in the IT and BFSI sectors, has positioned India as a global talent hub, encouraging long-term office commitments.

3. Infrastructure Development: Continued improvements in urban infrastructure, including metro connectivity, smart city projects, and upgraded roadways, have enhanced the attractiveness of office properties.

4. Rise of GCCs and Tech Hubs: The rapid expansion of Global Capability Centres, particularly in Hyderabad and Bengaluru, has led to increased demand for Grade A office real estate, further pushing rental prices.

5. Investor Interest and Supply Constraints: While investor confidence remains high, the limited supply of top-tier office spaces in key micro-markets has created upward pressure on rents.

Global Influence: The Dominant Role of US-Based Firms

One of the standout observations in the Anarock report is the outsized role played by US companies in India’s commercial leasing ecosystem. Accounting for 45% of all leasing activity, US firms are not just leading the demand for space, but also influencing the design, functionality, and technological features of modern offices.

In Mumbai, for example, US banks dominate the BFSI space, while in Bengaluru and Hyderabad, US-based tech giants and innovation labs are among the top tenants, constantly seeking modern, eco-friendly, and scalable workspaces.

Expert Perspectives: Optimism Despite Global Headwinds

Despite broader concerns about global inflation, geopolitical instability, and shifting economic policies, India’s office rental market has remained buoyant. Industry insiders are optimistic that this trend will persist, backed by robust domestic demand, digital growth, and policy continuity.

Mr. Chilukuri noted that companies are increasingly moving towards “future-ready offices”, equipped with digital infrastructure, sustainability features, and flexibility to accommodate hybrid working models. He believes this shift will continue to drive rental appreciation, particularly in IT and innovation-driven corridors.

Similarly, Mr. Paplikar highlighted the rising demand for co-working spaces and tech-friendly office layouts as businesses evolve with changing workforce expectations.

Conclusion: A Future of Upward Momentum

The Indian commercial real estate market is witnessing a powerful revival, with office rental values surging across key metros. As businesses re-evaluate their workplace strategies, prime locations with robust infrastructure, digital connectivity, and skilled talent are poised to see continued rental escalation.

While Mumbai, Hyderabad, and Delhi-NCR are currently leading the charge, the growth trend is expected to spread to Tier-2 cities and emerging commercial zones as demand outpaces supply in traditional hubs. With international businesses reaffirming faith in India’s market and workforce, the outlook for office leasing remains positive in the medium to long term.

This rising trend not only signals renewed business confidence but also reaffirms India’s position as a global commercial destination for innovation, services, and investment. As digital transformation, infrastructure investments, and pro-business policies continue to gain pace, India's office rental landscape is set for continued growth and evolution.

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