India Real Estate Market Q3 2025: Robust Office Growth, Premium Residential Surge, and Resilient Fundamentals

India’s real estate sector demonstrated remarkable resilience in the third quarter of 2025, led by robust activity across both the office and residential markets despite global uncertainties and subdued expectations. The following article delves into the key dynamics, growth patterns, and emerging trends shaping the Indian real estate landscape from July to September 2025, as outlined in the latest industry report.

Office Market Overview

India’s office market achieved a significant milestone by surpassing 1 billion square feet in total stock during Q3 2025, a testament to the continued expansion of commercial real estate in the country. While transaction volumes for the quarter, at 1.66 million square meters (17.8 million sq ft), represented a modest 6% year-on-year decline due to an exceptionally strong performance in the corresponding quarter of 2024, the year-to-date (YTD) figure reflected a robust 24% YoY growth, setting the stage for a new annual record.​

Grade A office spaces dominated the landscape, accounting for 88% of volumes leased in Q3 and an impressive 92% YTD, as demand moved toward modern, sustainability-focused workplaces. The largest city markets—Bengaluru, Mumbai, and the National Capital Region (NCR)—contributed to half the volume transacted, with Bengaluru leading at 0.39 million sq m (4.2 million sq ft) in the quarter.​

Drivers of Growth

Global Capability Centres (GCCs) remained principal drivers, accounting for about 32% of office space transactions. Of the GCC-related leasing activity in Q3 2025, Bengaluru was the primary choice, absorbing 65% of associated leases. Hyderabad and Chennai followed closely, propelled by a growing preference for cost-effective, talent-rich destinations. Third-party IT service providers staged a comeback, comprising 18% of total transactions and reflecting a 38% YoY growth. Flexible office spaces solidified their position with over 20% market share, a growth area buoyed by the evolving requirements for hybrid and scalable office environments.​

India-facing businesses, though contributing significantly, saw a minor share reduction due to the rising presence of international and technology-driven occupiers.​

Rental and Supply Dynamics

Office rentals experienced healthy gains, with Mumbai topping at 11% YoY growth, NCR at 9%, and Bengaluru at 6%. Kolkata registered a remarkable 14% YoY surge. The quarter also witnessed the completion of 1.15 mn sq m (12.4 mn sq ft) of new office space—nearly half in Bengaluru alone. As supply trailed persistent transaction volumes, overall office market vacancies dropped to 14.5% from 14.9% a year ago, signaling an undersupplied and strong market.​

Residential Market Trends

India’s residential market maintained a stable trajectory in Q3 2025, reflecting the economic resilience seen nationally. Inflation fell to 2.07% in August, providing a favorable backdrop for homebuying. The Reserve Bank of India raised its GDP growth outlook for FY 2026 to 6.8%, undergirded by coordinated policy moves, including interest rate reductions and improved liquidity for both developers and buyers.​

A total of 87,603 residential units were sold during the quarter, a marginal 1% increase on a YoY basis. Market activity showed a stable or upwards trend in most cities, with only Pune experiencing an 8% YoY contraction. Mumbai led with 24,706 units sold (2% annual growth), while Chennai posted the strongest gains at 12% YoY, with 4,617 units sold—the highest since the pandemic.​

Supply, Pricing, and Segmentation

Even as sales volumes held firm, launches outpaced sales for the twelfth consecutive quarter, with 88,655 new units coming to market—a 2% drop from the previous period. Bengaluru and Chennai experienced the sharpest growth in launches at 28% and 44% respectively. Notably, market preference continued to shift toward higher ticket sizes: units under INR 10 million made up only 48% of sales versus 54% a year ago, while luxury segments above INR 10 million witnessed double-digit percentage increases in both sales and launches.​

Unsold inventory climbed, particularly in the INR 10-20 million and INR 20-50 million segments, but the “Quarters to Sell” (QTS) indicator remained stable at 5.8 quarters (less than 18 months), suggesting market absorption capacity is healthy. Price growth accompanied this segmentation shift, with increases strongest in NCR (19% YoY), Bengaluru (15%), and Hyderabad (13%).​

Strategic Policy and Financial Trends

Developers responded prudently by tapering new launches to avoid oversupply and have increased the use of bank and developer subvention schemes, making homes more accessible for buyers. Government measures—such as lower repo rates, reduced CRR, and GST cuts—have further bolstered liquidity, supporting both developers and homebuyers.​

Conclusion

Amidst global and domestic uncertainties in 2025, the Indian real estate market has demonstrated notable resilience and adaptability. The commercial sector is on pace for a record-breaking year, led by the surge of Grade A office transactions and robust demand for flexible, high-value spaces, while the residential space remains buoyant, with continued momentum in higher ticket sizes and sustained growth in major urban centers. Backed by stable economic indicators, proactive policy support, and innovation in financing, India’s real estate outlook remains optimistic for the remainder of the year and beyond

Source: Knight Frank India I India Real Estate - Office and Residential Market: Jul-Sep - 2025

Disclaimer: This article is for informational purposes only and should not be considered financial advice. Please consult with a qualified financial professional before making any investment decisions. The content of the above article is based on references, learnings and interpretations. Invest Corners does not guarantee the accuracy of the information provided.