India’s office leasing market maintains strong pace in Q1

India’s office market maintained its strong momentum with 18.3 msf leasing in Q1 2026, up 15% YoY, according to a survey by Colliers India, international property consultants.

Bengaluru & Hyderabad drove space uptake, collectively accounting for nearly half of the leasing activity.

In a related development, conventional leasing remains strong at 14.4 msf, and technology firms drive 36% of conventional space uptake during Q1 2026.  Flex spaces gain share, accounting for 21% of the overall leasing in Q1.

While new supply level remained strong at 11.8 msf during Q1, a 19% YoY rise, vacancy levels declined close to 90 basis points on an annual basis to 15.3%.

India’s office market across the top seven cities has started on a strong note in 2026, registering 18.3 million sq ft of leasing activity in the first quarter, up by 15% year-on-year (YoY).

This continued momentum has been supported by strengthening occupier demand across sectors and expanding Global Capability Centers (GCCs) footprint, despite ongoing global uncertainties.

Bengaluru, followed by Hyderabad, together accounted for nearly half of the quarterly leasing activity, cumulatively contributing 8.7 million sq ft of demand. Meanwhile, Grade A space uptake was firm in cities like Mumbai, Pune, Delhi NCR and Chennai, with each of them witnessing leasing in the range of 2-3 million sq ft.

Interestingly, office space demand in Hyderabad and Pune more than doubled on an annual basis during Q1 2026.

“Space uptake from GCCs too has been firm, accounting for almost half of the overall demand.

“Although global headwinds continue to loom large and can potentially impact completion timelines, demand side outlook for 2026 remains positive at this juncture.

The Indian office market will continue to be one of the best performing markets in the APAC region,” said Arpit Mehrotra, Managing Director, Office Services, India, Colliers.

New supply across the top seven cities remained strong at 11.8 million sq ft, up 19% YoY in Q1. Technology firms drove 36% of conventional space uptake in Q1; Flex space demand continued to witness sustained growth.

During Q1 2026, leasing in conventional spaces remained robust at 14.4 million sq ft driven by technology and BFSI occupiers. These two sectors together drove nearly two-thirds of the conventional space uptake, with 9.5 million sq ft of cumulative leasing during the quarter. While Bengaluru and Mumbai accounted for a majority of the space uptake by BFSI firms during the quarter, in case of technology firms, Bengaluru and Hyderabad collectively drove more than 60% of the demand.

Leasing activity by flex space operators too witnessed a notable 77% YoY increase in Q1 2026 with close to 4 million sq ft of space uptake. Delhi NCR followed by Hyderabad together drove more than 45% of the flex space leasing.

Interestingly, flex space adoption in cities like Kolkata & Delhi NCR was notably strong, with at least 40% of quarterly leasing of respective cities being driven by flex operators.

As demand continues to outpace new supply consistently, overall vacancy levels dropped by close to 90 basis points on an annual basis, to around 15.3% at the end of Q1 2026. In fact, four out of seven top office markets witnessed significant drop in vacancy levels of at least 100 bps on a YoY basis during the quarter.

I received an apartment which has been gifted to me by my relative and bought using local funds in India.  Can I sell and repatriate the sale proceeds as it was bought out of rupee income?  Please clarify.  Pranam Sudhir, Sharjah.

The Reserve Bank has allowed authorised dealers of foreign exchange to permit repatriation even in respect of properties which were not acquired with foreign funds but held by NRIs in India either by inheritance or gift.  Repatriation of sale proceeds of such properties is permitted out of NRO account of an amount upto $1 million per financial year subject to the payment of applicable taxes in India.

I entered into a JV with a developer but the construction is partially completed and completion certificate issued for part of the project.  What will be the implication on capital gain tax?  Deepak Tilsani, Dubai.

Generally, capital gain shall be chargeable to tax in the year in which certificate of completion for the whole or part of the project is issued by the competent authority.  In your case, capital gain proportionate to the land involved in the part of the project for which certificate of completion has been issued shall be chargeable to tax in the year in which such certificate has been issued by the competent authority.