ICRA bullish on Bengaluru as office demand stays strong

Bengaluru is set to tighten further as India’s most in-demand office market, with vacancy levels projected to fall to 7.5–8 per cent by March 2027, among the lowest seen in the city’s recent history, according to a report by rating agency ICRA .

The forecast comes amid a sustained surge in office leasing, driven largely by global capability centres (GCCs), flex-space operators and the banking, financial services and insurance (BFSI) sector.

ICRA said Bengaluru will continue to lead the country in net absorption, reinforcing its position as India’s primary commercial office hub.

Across the top six office markets — including Bengaluru, Chennai, Delhi NCR, Hyderabad, Mumbai Metropolitan Region and Pune — net absorption is expected to hit an all-time high of 69–70 million square feet in FY2026, with demand continuing into FY2027. Vacancy levels across these cities are projected to decline to 12–12.5 per cent by March 2027, a level not seen in recent years .

Bengaluru’s performance stands out even within this broader trend. Vacancy in the city had already dropped to 9.2 per cent by September 2025, and the continuing supply-demand imbalance is expected to push it lower over the next 18 months. Industry watchers say this tightening could put upward pressure on rentals, particularly in prime technology corridors and established business districts.

ICRA noted that GCCs alone are expected to lease 50–55 million square feet between April 2025 and March 2027, accounting for nearly 40 per cent of incremental office demand during this period. Bengaluru has been a key beneficiary of this trend, with global firms expanding engineering, product development and back-office operations in the city .

Despite global headwinds such as policy tightening and trade restrictions in the US, office leasing by GCCs in India has remained resilient. “The sustained demand from GCCs and BFSI, coupled with India’s cost and talent advantages, is setting the stage for a new era of growth and stability in the sector,” said Anupama Reddy, Vice President and Co-Group Head, Corporate Ratings at ICRA .

The report also pointed out that net absorption has outpaced new supply for two consecutive years and is expected to do so again in FY2027. This trend, combined with improving debt metrics, is likely to keep institutional investor interest strong in Bengaluru’s commercial real estate market.