India Commercial Real Estate Market Size & Share Analysis - Growth Trends and Forecast (2026 - 2031)

India Commercial Real Estate Market Trends and Insights

AI-Led GCC Expansion Driving Grade-A IT Office Demand

India hosted more than 1,700 Global Capability Centers by December 2025, employing 1.6 million professionals and absorbing nearly 60 million sq ft annually, a scale that anchors occupier demand for technologically advanced campuses^{[1]NASSCOM Research, “India GCC Landscape Report 2025,” NASSCOM, nasscom.in}. Rents in Bangalore’s Outer Ring Road corridor climbed to INR 90–110 per sq ft per month in 2025, a 20% premium over suburban alternatives as multinationals race to secure talent pools. Pre-leasing is now commonplace 18–24 months ahead of completion, compressing future vacancy risk but limiting tenant negotiation latitude. Hyderabad’s Knowledge City and Chennai’s OMR corridor mirror the trend, while Tier-2 locations such as Kochi and Coimbatore are piloting GCC pilots that could capture about 10% of incremental demand once infrastructure matures. These moves consolidate South India’s dominance yet create leasing spill-over into nearby corridors as core sub-markets approach saturation.

E-Commerce & Quick-Commerce Growth Fueling Large-Format Urban Logistics Hubs

Logistics absorption breached 45 million sq ft in 2025, and Grade-A warehouses in peri-urban Mumbai, NCR, and Bangalore rented for INR 25–35 per sq ft per month, reflecting tight supply. Third-party logistics providers and online retailers increasingly sign nine- to twelve-year contracts for 500,000 sq ft blocks, replacing the shorter three- to five-year terms typical before 2024. The central government’s PM GatiShakti plan shortened freight times by upward of 10%, strengthening hub-and-spoke models. Delays in land aggregation, however, added up to twelve months to projects in Maharashtra and Uttar Pradesh, sustaining upward pressure on rents and cap rates. Operators able to navigate state-level approvals quickest are rewarded with near-full occupancy at handover.

REIT Pipeline Expansion & Relaxed FDI Caps Unlocking Institutional Capital

India’s listed REIT capitalization surpassed USD 15 billion in December 2025 and distributed USD 1.2 billion in dividends at 6–7% yields, drawing portfolio inflows from pension and insurance investors^{[2]Securities and Exchange Board of India, “Gazette Notification: REIT Regulations (Amendment) 2024,” Securities and Exchange Board of India, sebi.gov.in}. SEBI’s 2024 revision that cut the minimum ticket size to INR 10,000 opened the asset class to retail buyers, improving secondary-market liquidity. Foreign portfolio investors raised their allocation by more than 20% in 2025, capitalizing on embedded lease escalations of about 12% every three years. Further, the DPIIT move to lift the automatic FDI ceiling in REITs to 74% allows sponsors to retain operational control while monetizing stabilized assets. Developers like DLF and Prestige are now evaluating office and retail portfolio spin-offs, potentially adding USD 5–7 billion in fresh supply over the next three years.

Data-Center Colocation & Edge-Computing Campuses Repurposing Industrial Plots

National data-center capacity neared 950 MW by late 2025, backed by capex pledges exceeding USD 10 billion from hyperscalers. Colocation leaders such as Yotta Infrastructure and AdaniConneX pivoted idle industrial parcels in Navi Mumbai, Chennai, and Hyderabad into edge sites to cut latency for high-frequency users. Land values in Navi Mumbai rose 35% in 2025, underlining scarcity where power reliability and cable access intersect. Telangana and Tamil Nadu governments fast-tracked clearances for 50 MW-plus projects, cutting cycle times to under a year. Demand is fragmenting toward 5–10 MW modules in Tier-2 cities, a shift that benefits regionally skilled developers with better local permitting networks.

Elevated Policy Rates & Tighter Bank Lending Standards Raising Refinancing Risk

The Reserve Bank of India left the repo rate at 6.50% in early 2026 and commercial banks priced developer loans at 9.5–11%, lifting weighted-average capital costs to 12–13%. Non-bank financiers trimmed loan-to-value ceilings to 60–65%, forcing sponsors to inject more equity or seek joint ventures. Margins for mid-sized players thinned as refinance spreads widened 150–200 basis points between 2024 and 2025, triggering selective land divestments in Mumbai and NCR corridors^{[3]Insurance Regulatory and Development Authority of India, “Climate Risk and Insurance Premium Guidelines 2025,” IRDAI, irdai.gov.in}. Developers diversified into asset-light fee income property management and co-development to preserve cash flow. Firms with multi-asset portfolios, such as DLF and Prestige, weathered the squeeze better than single-asset owners that faced liquidity stress.

Hybrid/Remote Work Persistently Dampening Net Absorption in CBDs

Hybrid policies stabilized around 45% of white-collar roles in 2025, lowering seat density needs from 90–100 sq ft per head to 65–75 sq ft. Mumbai’s Bandra-Kurla Complex and Delhi’s Connaught Place posted 18–22% vacancy as tenants migrated to suburban parks offering lower rents and larger floor plates. Landlords extended rent-free periods of six to nine months for renewals, compressing effective yields. Meanwhile, selected suburban assets in Gurugram and Powai enjoyed 10-12% net absorption growth, highlighting occupier cost-sensitivity and preference for amenity-rich campuses. Capitalization-rate spreads of roughly 150 basis points now separate Grade-A suburban and legacy CBD towers, suggesting investor skepticism over expensive retrofits.

Segment Analysis

By Property Type: Logistics Outpaces Traditional Office Growth

Logistics gross leasable area expanded by 45 million sq ft in 2025, and the segment is projected to post 18.60% CAGR from 2026–2031, the fastest trajectory among all property classes, as e-commerce and quick-commerce operators sign 9 to 12 year leases for mega-warehouses near consumption hubs. Offices retained 49.14% of the Indian commercial real estate market share in 2025, but rising hybrid adoption tempers incremental demand. Retail captured 21% of value when mall developers added experiential features that raise dwell time and justify 8–10% annual rent escalations. Hospitality and other specialty assets together accounted for roughly 11%, buoyed by leisure-travel recovery in Goa and Rajasthan.

The India commercial real estate market size for logistics is on track to surpass USD 30 billion by 2031, while offices are forecast to reach USD 55 billion as net absorption normalizes post-2028. Logistics capitalization rates compressed to 7.25–7.75% in 2025, just 25 basis points higher than comparable office yields, underscoring investor confidence in long-term e-commerce fundamentals. Offices still draw core capital due to deep tenant rosters and embedded 12–15% rent escalations every three years. Retail’s pipeline remains selective, focusing on tier-1 and affluent tier-2 catchments where discretionary spending is resilient. Hotel transactions crossed USD 900 million in 2025 as international operators locked in management contracts amid rising occupancy.

By Business Model: Rental Segment Gains Institutional Favor

The rental structure is forecast to expand at 18.50% CAGR through 2031 as REIT sponsors and pension funds prioritize stable coupons over speculative capital gains. Sales transactions comprised 54.14% of India's commercial real estate market size in 2025, led by corporates purchasing high-street stores and industrial parcels for self-use. Build-to-lease pipelines expanded sharply: developers such as RMZ and Tata Realty pre-let entire towers 24 months ahead of delivery, ensuring bankability and lowering funding costs.

Grade-A office rental yields stabilized between 7.5–8.5% in Bangalore and Hyderabad during 2025, offering a 250-basis-point cushion over 10-year gilts and drawing USD 3 billion of foreign portfolio inflows into listed REITs. Conversely, headline prices for marquee high-street retail in Mumbai’s Linking Road topped INR 80,000 per sq ft, anchored by luxury tenants whose stable rents mitigate entry yields below 5%. Industrial land prices in Chennai and Pune logistics belts advanced 25% year on year, encouraging landowners to consider long-term leasehold structures that preserve upside while lowering stamp-duty leakage.

By End-User: Individual Participation Expands via Fractional Platforms

Corporations and SMEs captured 79.14% of the India commercial real estate market size in 2025, predominantly through long-term leases in Grade-A offices and warehouses. Individual investors, however, are projected to grow at 18.30% CAGR as fractional-ownership portals allow minimum tickets of INR 500,000 for stabilized assets. The “others” bucket, government and educational institutions, remains below 7% of demand yet shows steady leasing for administrative back-office and campus expansions.

Fractional platforms syndicated roughly USD 1 billion of commercial stock in 2025, listing 60 assets that generated 6–7% cash yields paid quarterly. Retail investors favored Tier-2 high-street shops in cities like Jaipur and Kochi, where entry costs are lower and yield spreads versus residential stay wider at 200–300 basis points. Regulatory clarity remains nascent, but draft SEBI rules expected in 2026 may categorize fractional vehicles under collective-investment schemes, improving governance and unlocking institutional coinvestment.

Note: Segment shares of all individual segments available upon report purchase

Geography Analysis

South India commanded 41.14% of India's commercial real estate market share in 2025, anchored by Bangalore’s annual office absorption of about 22 million sq ft and Hyderabad’s 400-plus GCCs employing 300,000 professionals. Chennai secured USD 1.8 billion in data-center capex during 2025 owing to carrier-neutral cable landings and abundant renewable power. Kochi and Coimbatore grew 18% and 20%, respectively, as pilot GCCs validated Tier-2 talent pools and livability advantages.

North India will likely post the fastest 18.70% CAGR through 2031, catalyzed by the Delhi-Meerut Expressway and the upcoming Jewar Airport that shortens transit and unlocks parcels along the Yamuna Expressway. Gurugram and Noida together absorbed about 17 million sq ft in 2025, with financial-services and e-commerce tenants gravitating toward suburban parks that combine large floor plates, lower rents, and metro access. Renewed policy focus on data-center clusters within NCR’s Knowledge Park and the upcoming Digital Gateway hub could accelerate hyperscale investments.

West India, led by Mumbai and Pune, represented 31% of the value in 2025. Bandra-Kurla Complex and Lower Parel demanded India’s highest office rents at INR 150–200 per sq ft per month, yet vacancy edges higher as some occupiers relocate to knowledge parks in Powai and Thane for 30% savings. Pune’s Hinjewadi and Kharadi corridors clocked 9 million sq ft of take-up in 2025, supported by technology exporters scaling captive centers.

East India, dominated by Kolkata, still accounts for under 10% of the national stock. Limited Grade-A supply and hybrid work have restrained absorption, but developers are launching retail-led mixed-use assets to capture consumer-spending tailwinds. Tier-2 cities—including Jaipur, Chandigarh, and Indore—registered 22% average absorption growth in 2025 as occupiers diversify geographic risk; however, exit liquidity constraints sustain capitalization-rate premiums of 100–150 basis points over Tier-1 equivalents.