GCCs – Driving Indian Commercial Real Estate in 2025

India’s office space market has seen unprecedented in the first quarter of 2025, setting new benchmarks in the Asia-Pacific region.

In Q1 2025, the sector recorded its highest-ever transaction volume, propelled by the rapid expansion of Global Capability Centres (GCCs), flexible workspace adoption, and a dynamic shift in occupier demand. India’s commercial real estate defied global economic uncertainties, showcasing its resilience amidst geopolitical challenges.

The positive sentiment around India’s economic stability has driven occupier activity. India’s GDP growth projections remain upbeat at 6.6%-6.7%, instilling confidence. More and more tech giants such as TCS, Infosys, and Wipro are actively encouraging employees to return to offices, further boosting demand for commercial spaces.

Record-Breaking Quarter for Commercial Real Estate

• The India commercial real estate market saw about 2.62 million square meters (28.2 million sq. ft) changing hands in Q1 2025, a 74% year-on-year surge.
• This single quarter accounted for nearly 40% of the total space transacted in the whole of 2024, itself a record year for the industry. Bengaluru was the clear leader with 45% of all office space transactions. The city saw a remarkable 259% YoY growth., with 1.18 million sq. m (12.7 million sq. ft) transaction volume.
• Mumbai, Pune, and Hyderabad also posted record or post-pandemic high transaction levels, underscoring the pan-India momentum in commercial real estate.

Meteoric Rise of GCCs

GCCs accounted for 44% of the total transacted space, with Bengaluru alone capturing 65% of GCC transactions.

Multinational corporations, especially from North America and Europe, are increasingly trusting Indian GCCs with their advanced business functions—analytics, R&D, engineering, and finance—reflecting a shift from back-office to strategic roles.

India’s immense talent pool, cost advantages, and robust infrastructure are making it the preferred global hub for commercial real estate investments and operations.

Flexible Workspaces are Thriving Too

Flexible office spaces saw fervent activity, with co-working spaces constituting 83% of all flex space transactions. This is up from a 63% average over the previous two years.

The total flex space leased reached 0.5 million sq. m (4.9 million sq. ft), a 28% YoY increase and the highest-ever quarterly tally.  The demand in this sector is attributed to smaller startups, SMEs, and enterprise clients opting for hybrid operative models.

Other Sectoral Shifts

Third-party IT services made their presence felt again and made up 19% of the total transacted space compared to just 9% in Q1 2024.

However, there was a shift among occupiers, with India-facing businesses declining in their share to 17%.

Constraints

It’s not all roses, though.

New office completions were lower than expected, with only 0.51 million square meters (5.5 million square feet) added during the quarter—a sharp drop of 58% from previous years. This may be due to more developers changing over to residential real estate from commercial.

All said and done, this drop has pushed vacancy rates down to 14.3% and driven rents higher across major cities like Bengaluru, Hyderabad, and Kolkata.

While demand remains strong, supply constraints will pose challenges for the office market. If developers continue to focus on residential projects due to higher returns, this trend might lead to a supply-demand imbalance in office spaces.

What is the Outlook for Commercial Real Estate?

There is absolutely no doubt that India’s commercial real estate market is on a strong growth trajectory, outpacing its APAC peers with robust performance in Q1 2025.

Real estate investments surged 88% year-on-year in H2 2024, reaching USD 3 billion. Of this, the office segment alone grew by 571%, accounting for nearly half of all inflows. Foreign investors, especially from APAC-based funds, contributed 57% of the total investments. This momentum is backed by India’s strong GDP growth, stable monetary policy, and rising corporate confidence.

Looking ahead, the outlook remains positive. The continued expansion of Global Capability Centres (GCCs), the rise of flexible workspaces, and a resurgence in the tech and outsourcing sectors are expected to drive demand further. With limited new supply and high demand, commercial real estate rents are likely to remain on an upward trend, as India solidifies its role as a key hub for global operations.

India Leads the Commercial Real Estate Race

India’s commercial real estate market is breaking records and expanding its global role. As GCCs take on more strategic functions and the country continues to build a foundation of robust economic growth and investor confidence, India is set to lead the APAC office space race in the coming years.

If you would like to invest in commercial real estate in Gurugram, Noida, Bangalore, or Pune, just get in touch with us. Our team of experts will guide you through every step, ensuring you make the most of India’s booming commercial real estate market.

Don’t miss out on the exciting opportunities in this sector—contact us today!  Sources: CBRE: India Market Monitor Q1 2025, Colliers, Business Standard