India Real Estate Market closed 2025 with its strongest performance on record, achieving net absorption of 61.4 million square feet across the top eight cities, up 25% year-on-year, according to Cushman & Wakefield's Q4 MarketBeat report. The milestone year signals improving cash-flow visibility, tightening vacancies and sustained rental upside for capital markets and listed office REITs.

Net absorption comfortably surpassed the 49.1 million square feet absorbed in 2024, with the acceleration coming despite a sharp rise in new supply. This performance underscores the depth of demand and reinforces the structural strength of India's office market at a time when global commercial real estate remains under pressure.

Core Markets Drive Record Absorption

Bengaluru continued to anchor demand, recording the highest net absorption across all cities. Delhi NCR followed as the second-largest contributor, driven by strong leasing momentum across established business districts.

Chennai emerged as the standout performer, recording a sharp 187% year-on-year jump in net absorption to 7.00 million square feet, highlighting its growing relevance as companies diversify their India office footprint. Mumbai, Hyderabad and Pune also posted solid absorption levels, reflecting sustained occupier activity across technology, BFSI and manufacturing-led demand.

Leasing Momentum Supports Growth Thesis

Gross leasing volumes remained resilient at approximately 88.7 million square feet, nearly matching the previous year's record high and marking the second consecutive year of peak leasing activity. Fresh leasing accounted for nearly 80% of total leasing volumes, signalling expansion-led demand rather than defensive renewals.

Bengaluru, Mumbai and Delhi NCR together contributed around 62% of total leasing, highlighting the continued dominance of gateway office markets that typically command premium rentals and higher occupancy stability. This mix of fresh demand and large-format transactions improves lease tenures, enhances tenant quality and supports predictable annuity-style income streams for investors.

GCC Expansion Drives Structural Demand

Global Capability Centres recorded a new high of 29.3 million square feet, accounting for 33% of total gross leasing volumes. The scale and consistency of GCC expansion reinforces India's role as a core node in global enterprise strategies, underpinned by talent availability, cost efficiencies and an expanding digital ecosystem.

IT-BPM remained the largest occupier segment, contributing 31% of total leasing and posting its highest-ever annual leasing volume. The diversified demand base across sectors signals a more resilient market structure.

Supply Growth Amid Vacancy Compression

Developers delivered approximately 53 million square feet of new office space in 2025, a 17% year-on-year increase and the first time annual completions crossed the 50 million square feet threshold. Bengaluru and Pune together accounted for nearly half of new supply, easing availability constraints in some micro-markets.

Despite record completions, overall vacancy declined by a sharp 210 basis points year-on-year, representing the steepest annual compression on record. Vacancy levels fell across all major markets except Pune and Ahmedabad, while pre-commitments increased as occupiers moved early to secure quality Grade A assets.

Rental Growth Strengthens REIT Outlook

Rental values rose across all eight cities, with Hyderabad and Mumbai leading the growth trajectory. The combination of rising rentals, falling vacancies and long lease tenures strengthens distributable cash flows and enhances yield stability for listed office REITs.

Cushman & Wakefield noted that the 2025 performance reflects a durable growth cycle rather than a one-off spike, with GCC expansion, infrastructure upgrades and a diversified occupier base expected to sustain momentum into 2026. For capital markets, the data reinforces the case for India's office real estate as a steady, income-generating asset class amid global volatility.

Unsold housing inventory across India's seven major cities increased 4% in 2025, reaching nearly 5.77 lakh units as new supply continued to outpace demand, according to data released by real estate consultant Anarock Capital. The imbalance between supply and demand has created a challenging market environment for developers and homebuyers alike.

Market Overview and Key Statistics

The comprehensive analysis of the primary residential market revealed significant shifts in housing dynamics across major metropolitan areas. Anarock Capital's data demonstrates the growing gap between what developers are building and what consumers are purchasing.

The data indicates that while new supply grew modestly at 2%, housing sales experienced a sharp 14% decline, contributing to the accumulation of unsold inventory. Anarock Capital explained that the annual rise in unsold inventory was "largely because of tapered demand and increased new supply in the year."

City-wise Performance Analysis

The unsold housing stock showed varied performance across different cities, with some markets experiencing significant increases while others managed to reduce their inventory levels.

Northern and Western Markets

Delhi-NCR recorded a 5% increase in unsold housing stock, rising to 90,455 units from 85,901 units in the previous year. The National Capital Region continues to face challenges with demand absorption despite being one of India's largest real estate markets.

Mumbai Metropolitan Region (MMR) bucked the overall trend with a marginal 1% decline in unsold homes, dropping to 1,79,228 units from 1,80,964 units. This performance suggests relatively better demand-supply balance in the financial capital.

Southern Markets Show Mixed Results

Bengaluru experienced the most significant increase among all cities, with unsold housing stock surging 23% to 64,863 units from 52,807 units. This substantial rise indicates potential oversupply concerns in India's IT capital.

Chennai also showed a notable 18% increase in unsold inventory, reaching 33,434 units from 28,423 units. In contrast, Hyderabad managed to reduce its unsold homes by 2% to 96,140 units from 97,765 units, demonstrating better market absorption.

Pune recorded a modest 3% increase to 83,491 units from 80,672 units, while Kolkata saw a 9% rise to 29,007 units from 26,542 units.

Market Outlook and Future Expectations

Regarding the market outlook, Anarock Capital believes that demand should rise with lower interest rates on home loans, provided housing prices remain under control. The current inventory buildup stems from the combination of tapered demand and increased new supply throughout the year.

The market dynamics indicate that developers may need to reassess their launch strategies and pricing models to better align with current demand patterns. The 14% decline in sales alongside continued new supply additions highlights the need for more calibrated market approaches in the coming period.