Credit: GRI ClubCommercial Real Estate: Reset 2025 - Trends & Outlook
Industry leaders, investors, and stakeholders discuss key trends shaping the sector
February 28, 2025Real Estate
Written by Isabella Toledo
The “Commercial Real Estate: Reset 2025 -– Trends & Outlook for India” forum, co-hosted by GRI Club India and K Raheja Corp brought together industry leaders to analyse trends, explore strategies, and identify opportunities for the new year.
New Grade-A developments are struggling to keep up with occupier demand, particularly from technology, financial and professional services sectors. This mismatch has led to record-high rental increases and intensified competition for prime office spaces.
While traditional Central Business Districts (CBDs) such as Mumbai’s Bandra-Kurla Complex (BKC) and Delhi’s Connaught Place remain highly sought after, the session underscored the rising appeal of secondary business districts and emerging micro-markets in cities like Bangalore, Hyderabad, and Chennai, where improved infrastructure, lower costs, and enhanced amenities make them attractive alternatives to expensive CBDs.
However, the availability of premium spaces remains limited, as developers face rising construction costs, lengthy approvals, and financing challenges. Many are adopting phased development approaches to mitigate risks, though this slows the pace of new supply.
Tenant expectations are also evolving, with a focus on sustainability, employee well-being, and workplace experience. Buildings with green certifications, enhanced amenities, and transport connectivity are now essential. Developers who align with these demands will be best positioned to attract long-term tenants.
Looking ahead to 2025, the ability to balance supply expansion with financial sustainability will define market leaders. Success will depend on navigating capital constraints, anticipating demand trends, and delivering high-quality assets in emerging growth markets.
Participants noted the explosive growth of flex spaces, with Mumbai seeing a 400% surge in flex seat absorption over the past three years. Companies are increasingly moving away from long-term leases, opting for adaptable, service-oriented solutions to navigate uncertain workforce planning and market fluctuations.
Still, challenges remain - while flex spaces are growing, they are not a one-size-fits-all solution. Concerns around data security, governance, and operational control limit their adoption for large-scale, permanent office needs. Instead, companies are using them strategically - for temporary expansions, project teams, or satellite offices.
The business model is also evolving, with operators transitioning from offering desks to becoming full-service providers, including handling fit-outs, facility management, and technology integration to position themselves as outsourced real estate partners and challenge traditional landlords into rethinking lease structures and tenant relationships.
Hybrid work trends and AI-driven job transformations are further shaping workspace demands, as companies experiment with decentralised office footprints, flexible schedules, and remote work, creating opportunities for developers to offer hybrid-ready office environments.
As the market matures, industry consolidation is expected. With over 400 operators in India, only a few have the scale and financial strength to serve large enterprises effectively, and stronger players are likely to acquire smaller operators, integrating flex solutions into Grade-A developments.
While institutional investors remain bullish, they are becoming more selective, with private capital flowing into high-quality Grade-A office projects led by experienced developers. Public capital, however, faces challenges due to global market volatility, though domestic institutional investors are filling the gap.
Interest rate expectations are also shaping investment strategies. The recent RBI rate cut in February - the first in nearly five years - has injected optimism into the market, with further cuts expected to boost debt-financed projects.
This shift is particularly advantageous for Grade-A developers, who continue to access financing easily, while mid-sized players struggle to secure long-term capital. Meanwhile, the investor landscape is shifting, with institutional capital dominating and HNIs/family offices favouring liquid assets over direct real estate investments.
Although concerns about hybrid work models and AI-driven workforce changes persist, the consensus is that India’s strong economic fundamentals and GCC growth will sustain office demand, especially in cities with robust infrastructure.
Structured financing remains critical for large-scale developments, as projects require significant upfront investment and long gestation periods. While there is no shortage of available debt, developers must demonstrate strong financial fundamentals and structured business plans to secure financing on favourable terms.
Despite short-term volatility in public markets, the long-term outlook for India’s commercial real estate remains positive. Investors view the market as resilient and high-growth, with capital increasingly flowing towards projects that demonstrate financial resilience, market adaptability, and strong operational fundamentals. The key takeaway is clear: while capital is abundant, success will depend on aligning with these evolving investor priorities.
***
Join top industry leaders at GRI Offices & Global Capability Centers 2025, taking place on March 12th in Mumbai, for a unique networking opportunity and expert-led discussions on the future of India’s evolving CRE market.
CLICK HERE to learn more about GRI Offices & Global Capability Centers 2025.
The “Commercial Real Estate: Reset 2025 -– Trends & Outlook for India” forum, co-hosted by GRI Club India and K Raheja Corp brought together industry leaders to analyse trends, explore strategies, and identify opportunities for the new year.
The push for quality amidst record leasing
One of the core challenges discussed was the growing imbalance between demand and supply in India’s urban commercial real estate markets. Despite robust demand, with 70 million square feet of gross leasing recorded last year, supply constraints are creating significant hurdles.New Grade-A developments are struggling to keep up with occupier demand, particularly from technology, financial and professional services sectors. This mismatch has led to record-high rental increases and intensified competition for prime office spaces.
While traditional Central Business Districts (CBDs) such as Mumbai’s Bandra-Kurla Complex (BKC) and Delhi’s Connaught Place remain highly sought after, the session underscored the rising appeal of secondary business districts and emerging micro-markets in cities like Bangalore, Hyderabad, and Chennai, where improved infrastructure, lower costs, and enhanced amenities make them attractive alternatives to expensive CBDs.
However, the availability of premium spaces remains limited, as developers face rising construction costs, lengthy approvals, and financing challenges. Many are adopting phased development approaches to mitigate risks, though this slows the pace of new supply.
Tenant expectations are also evolving, with a focus on sustainability, employee well-being, and workplace experience. Buildings with green certifications, enhanced amenities, and transport connectivity are now essential. Developers who align with these demands will be best positioned to attract long-term tenants.
Looking ahead to 2025, the ability to balance supply expansion with financial sustainability will define market leaders. Success will depend on navigating capital constraints, anticipating demand trends, and delivering high-quality assets in emerging growth markets.
(GRI Club)
The evolution of flex spaces and hybrid work models
Once a niche sector, flexible workspaces and hybrid work models have become integral to corporate strategies, driven by evolving workforce needs, operational agility, and employee expectations.Participants noted the explosive growth of flex spaces, with Mumbai seeing a 400% surge in flex seat absorption over the past three years. Companies are increasingly moving away from long-term leases, opting for adaptable, service-oriented solutions to navigate uncertain workforce planning and market fluctuations.
Still, challenges remain - while flex spaces are growing, they are not a one-size-fits-all solution. Concerns around data security, governance, and operational control limit their adoption for large-scale, permanent office needs. Instead, companies are using them strategically - for temporary expansions, project teams, or satellite offices.
The business model is also evolving, with operators transitioning from offering desks to becoming full-service providers, including handling fit-outs, facility management, and technology integration to position themselves as outsourced real estate partners and challenge traditional landlords into rethinking lease structures and tenant relationships.
Hybrid work trends and AI-driven job transformations are further shaping workspace demands, as companies experiment with decentralised office footprints, flexible schedules, and remote work, creating opportunities for developers to offer hybrid-ready office environments.
As the market matures, industry consolidation is expected. With over 400 operators in India, only a few have the scale and financial strength to serve large enterprises effectively, and stronger players are likely to acquire smaller operators, integrating flex solutions into Grade-A developments.
(GRI Club)
A market poised for growth amid selective investment
India’s commercial real estate attracted USD 2.3 billion in investments last year, driven by strong occupier demand, GCC expansion, and a stable economic outlook.While institutional investors remain bullish, they are becoming more selective, with private capital flowing into high-quality Grade-A office projects led by experienced developers. Public capital, however, faces challenges due to global market volatility, though domestic institutional investors are filling the gap.
Interest rate expectations are also shaping investment strategies. The recent RBI rate cut in February - the first in nearly five years - has injected optimism into the market, with further cuts expected to boost debt-financed projects.
This shift is particularly advantageous for Grade-A developers, who continue to access financing easily, while mid-sized players struggle to secure long-term capital. Meanwhile, the investor landscape is shifting, with institutional capital dominating and HNIs/family offices favouring liquid assets over direct real estate investments.
Although concerns about hybrid work models and AI-driven workforce changes persist, the consensus is that India’s strong economic fundamentals and GCC growth will sustain office demand, especially in cities with robust infrastructure.
Structured financing remains critical for large-scale developments, as projects require significant upfront investment and long gestation periods. While there is no shortage of available debt, developers must demonstrate strong financial fundamentals and structured business plans to secure financing on favourable terms.
Despite short-term volatility in public markets, the long-term outlook for India’s commercial real estate remains positive. Investors view the market as resilient and high-growth, with capital increasingly flowing towards projects that demonstrate financial resilience, market adaptability, and strong operational fundamentals. The key takeaway is clear: while capital is abundant, success will depend on aligning with these evolving investor priorities.
***
Join top industry leaders at GRI Offices & Global Capability Centers 2025, taking place on March 12th in Mumbai, for a unique networking opportunity and expert-led discussions on the future of India’s evolving CRE market.
CLICK HERE to learn more about GRI Offices & Global Capability Centers 2025.
