Thursday, 5 March 2026
As India’s real estate market closed out 2025, December continued to shape rental pricing trends across both residential and office segments, according to industry data and market reports. The final month of the year remains a crucial period for lease renewals, landlord incentives and occupier decisions that influence rent movements in the year ahead.
Office leasing activity in India reached a record level in 2025, with total absorption of around 82.6 million square feet across key cities — the highest on record for the third consecutive year — according to CBRE’s quarterly figures. The strong annual performance was supported by continued demand from corporate occupiers, including technology firms, Global Capability Centres (GCCs) and flexible workspace operators. Gross leasing in the fourth quarter alone topped 22 million square feet, led by Bengaluru, Mumbai and the National Capital Region (NCR). Average rents in major office markets also rose through the second half of 2025, with some markets reporting year-on-year increases of up to 10–16% as occupier demand outpaced available space. Rents edged higher even in traditionally slower periods, reflecting a tightening supply situation and growing tenant confidence.
Industry surveys from JLL show that office rental rates continued to rise modestly across major cities in Q4 2025, with Hyderabad, Delhi NCR, Bengaluru and Mumbai all recording quarterly rent increases. Vacancy rates reportedly declined in several urban markets as occupiers renewed or expanded space commitments.
Office landlords increasingly used incentives to secure long-term deals toward year end, including rent-free periods on multi-year leases for new occupiers or renewals, a common strategy in competitive submarkets. This reflects both occupier interest in cost predictability and landlords’ efforts to lock in tenancy ahead of 2026.
Residential rental inflation remained positive in 2025, although growth rates moderated compared with the steep increases seen in previous years. According to a residential market analysis reported by The Economic Times, average rental growth across six major Indian cities — Bengaluru, Mumbai, Delhi NCR, Hyderabad, Pune and Chennai — ranged between approximately 7% and 9% in the first half of 2025. This represented a slowdown from higher annual increases recorded in earlier post-pandemic years, as housing supply improved and rental markets stabilized.
Rental inflation continued into the latter part of the year. Separate reporting on prime residential rents in late 2025 indicated that rents in core locations of cities such as Mumbai, Bengaluru and Gurugram saw sharper increases, driven in part by demand near employment hubs and limited affordable inventory. These price pressures have been especially visible in micro-markets with strong connectivity and job growth.
Population movement played a role in rental trends during December and across 2025. Return-to-city migration following holiday seasons and sustained demand from corporates requiring office-proximate housing supported rental absorption in urban centres. Migrant inflows toward employment hubs such as Gurugram, Hyderabad and Bengaluru contributed to tightening residential rental markets. The rental increase in IT corridors and other high-demand areas has been linked to this migration pattern.
Both residential and commercial landlords adopted incentive strategies toward year end to secure renewals and reduce vacancy risk. In the office segment, landlords offered rent-free periods and other lease concessions to encourage longer leases with key tenants. Residential landlords, in contrast, focused on value-added benefits for renters such as offering furnished units and flexible deposit structures rather than deep headline rent cuts.
Corporates continued to treat December as a strategic period for office footprint decisions, often finalising space renewals or expansions ahead of the new financial year. Many companies also evaluated upgrades to sustainable, high-performance buildings to align with environmental, social and governance (ESG) priorities.
Industry analysts expect rent growth in both residential and office markets to persist in 2026, though at a moderated pace compared with the post-pandemic surge years. Continued economic expansion, return-to-office mandates, and limited availability of quality inventory in core micro-markets are likely to support rental stability through the year.
Office markets across Bengaluru, Delhi NCR and Mumbai are expected to remain active, with further leasing growth anticipated as occupiers expand or optimise portfolios. Residential rentals may continue to rise where demand outstrips supply, particularly in employment hubs and metro suburbs.
Overall, the December snapshot confirms that rental pricing dynamics remain a key barometer for India’s real estate trajectory as stakeholders head into 2026.
Source: CIJ.World India Research & Analysis Team
