(MENAFN- IANS) Mumbai, April 3 (IANS) India's top eight office markets witnessed an unprecedented surge in transactions, reaching 28.2 million square feet (mn sq ft) in Q1 (Jan-March) 2025 -the highest ever recorded in a single quarter, according to a report released on Thursday by real estate firm Knight Frank India.

Driven by strong economic momentum, occupier confidence propelled transaction volumes to new heights. This marks a remarkable 74 per cent year-on-year (YoY) growth, surpassing the previous peak set in Q3 2024 by 48 per cent, the report said.

Bengaluru led the office market expansion in Q1 2025 by recording 12.7 mn sq ft in transactions, which comprised 45 per cent of the total office space uptake. Office transactions in Bengaluru recorded a massive 259 per cent YoY growth over Q1 2024. As much as 58 per cent or 0.7 mn sq m (7.4 mn sq ft) of the area transacted in Bengaluru was accounted for by pre-commitments.

Hyderabad maintained a steady momentum, reaching 4 mn sq ft volume in office demand. Pune with 3.7 mn sq ft and Mumbai with 3.5 mn sq ft also set new quarterly records in transaction volumes.

Bengaluru and Pune outpaced the national YoY growth rate of 74 per cent, emerging as the key volume drivers of India's office market.

Office transactions were primarily driven by Global Capability Centres (GCC), recording 12.4 mn sq ft transactions, making up 44 per cent of the total market share. Third-party IT services with 5.5 mn sq ft took up 19 per cent of market share, closely followed by flex operators with 5.5 mn sq ft, commanding 20 per cent of the market share.

Bengaluru dominated transaction volumes in GCCs and Third-party IT services with 8 mn sq ft and 2.1 mn sq ft transacted respectively in the city. Pune led in flex space transactions with 1.61 mn sq ft taken up by flex operators during the quarter.

Global Capability Centres played a key role in driving India's office market, accounting for 44 per cent of total demand, with 12.4 mn sq ft transacted. Bengaluru dominated, contributing nearly 8 mn sq ft, or 65 per of all GCC transactions in Q1 2025.

Shishir Baijal, Chairman and Managing Director, Knight Frank India, said: "Q1 2025 was an exceptional period for the Indian office space market. With the demand for GCCs consistently breaching new highs, global perception of India as a long-term investment destination continues to strengthen."

"With completions having lagged transactions consistently since 2021, vacancy levels trended down from 17.2 per cent then to a healthy 14.3 per cent in Q1 2025. This supply squeeze across the top markets has also caused rents to trend higher since early 2022," he added.

As India continues to lead on growth parameters, the office space market faces minimal headwinds apart from a constrained supply and appears well-positioned to maintain its momentum into 2025, the report added.

MENAFN03042025000231011071ID1109384826