India’s Office Space Market Expands on Strong Leasing Demand: KRT CEO

India’s office real estate sector is witnessing a notable upswing in leasing activity and occupancy rates, fueled by demand from global capability centres (GCCs) and front-office occupiers, according to Shirish Godbole, CEO of Knowledge Realty Trust (KRT), the country’s largest real estate investment trust by market capitalization.

Speaking to Business Standard, Godbole highlighted the robust environment for office space demand in India. "We are currently experiencing a strong period of leasing interest, particularly driven by GCCs and front-office operations," he said. These segments include industries such as legal services, accounting, media, and large Indian corporate groups that require premium office environments in key metropolitan areas.

Godbole also pointed out that tighter immigration and visa policies in countries like the United States, Australia, and Canada may indirectly benefit Indian office markets. "As it becomes more challenging for talent to relocate to these Western nations, companies are increasingly shifting work to India, which is a positive development for our office leasing sector," he remarked.

Knowledge Realty Trust recently released its quarterly financial results, revealing a 15 percent year-on-year increase in net operating income (NOI). The growth was entirely organic, stemming from the trust’s existing portfolio rather than acquisitions or expansions. The trust’s assets are strategically concentrated, with approximately one-third of its portfolio value based in Mumbai. This provides exposure to premium front-office tenants alongside GCCs.

The company is actively exploring expansion opportunities in other major Indian cities. Currently holding one asset each in Chennai and Gurugram, KRT aims to strengthen its presence in these markets. Additionally, Pune is being considered for future acquisitions, marking a strategic move into a city where the trust has yet to establish a footprint.

Leasing activity remains robust. During the second quarter of fiscal year 2027, KRT achieved gross leasing of 0.8 million square feet, bringing the total leasing volume for the first half of the fiscal year to 2.2 million square feet. Notably, GCCs accounted for 42 percent of this demand, a significant increase from around 30 percent four years prior, indicating a growing preference for India as a hub for global business services.

Financially, the trust’s revenue rose 13 percent year-on-year to ₹1,272.5 crore in the second quarter. It also declared record distributions totaling ₹764 crore for the quarter, reflecting strong cash flows and investor returns. Occupancy rates stood at 93 percent by area and 94 percent by value, with projections to reach 94 to 95 percent in the upcoming two quarters.

Besides operational performance, Godbole emphasized the strong growth potential for the Indian REIT market as a whole. Investor participation has expanded dramatically, growing from about 4,000 investors in 2019 to nearly 500,000 today. This surge in interest is expected to continue, supported by increasing awareness of REITs as a vehicle for real estate investment in India.

India’s office real estate sector is benefiting from a combination of domestic economic growth, the continued rise of global business services, and evolving workplace needs. The trend toward larger, high-quality office spaces aligns with the requirements of multinational companies and front-office businesses seeking to establish or expand their presence in key Indian cities. KRT’s performance serves as a key indicator of these broader market dynamics.