Hyderabad: The city office market witnessed a 29 per cent quarterly rise in gross leasing in the latest March quarter to a record 40 lakh sft (four million), mainly driven by a strong demand for foreign firms setting global capability centres (GCCs), according to a report. Real estate consultant Knight Frank India on Thursday released its ‘India Real Estate: Office and Residential Report’ for January-March 2025.

“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,” Shishir Baijal, Chairman and Managing Director of Knight Frank India, said.

In Hyderabad, the office demand rose more than 31 per cent to 40 lakh sft, from 30 lakh sft in Q1 2024, and increased by 29 per cent quarter-on-quarter from 31 lakh sft in Q4, 2024.

Among eight major cities, Knight Frank data showed that the gross leasing of office space in Bengaluru jumped more than three times to 127 lakh sft during January-March 2025 from 35 lakh sft in the year-ago period. However, the data showed that the office leasing in Delhi-NCR dropped 33 per cent to 21 lakh sft, from 31 lakh sft.

Knight Frank noted that office space transactions in Hyderabad were primarily driven by third-party IT services which saw leasing of 19 lakh sft in the latest March quarter, compared to three lakh sft in the year-ago period. Whereas GCCs leased out 16 lakh sft, as against 20 lakh sft.

In Q1 2025, all markets witnessed higher rental values both in terms of YoY growth and sequentially over the previous quarter. Office rents in Hyderabad recorded the highest rental growth of nine per cent at Rs 72 per sft per month. Constrained supply of new office space during the quarter caused led rents to trend higher, Knight Frank report mentioned adding that while 37 lakh sft of new office space was added into the market in Q1 2024, the first quarter in 2025 did not witness any completion of office space.