India's Office Building Construction Completion Area Drops 36% QoQ in Q1 2026

en.Wedoany.com Reported - A report released by Indian real estate consultancy Vestian states that in the first quarter of 2026, the completed area of new office building construction in India decreased by 36% quarter-on-quarter to 9.7 million square feet, marking the lowest level in the past four quarters.

The slowdown was primarily driven by cities such as Bangalore, Hyderabad, and Mumbai, where construction developers adopted a cautious approach. Among these, Hyderabad saw the most significant decline in construction completion area, plummeting by 95% from 6 million square feet in the previous quarter to 300,000 square feet. Despite limited supply, office space absorption increased by 20% year-on-year to 21.53 million square feet, a growth attributed to sustained demand from global capability centers and India's appeal as a business hub.

The divergence between supply and demand led to a tightening of the all-India vacancy rate from 10.8% in the previous quarter to 9.5%. Rents continued to rise, indicating a market shift towards a landlord-driven landscape, especially in prime locations. Commenting on this trend, Shrinivas Rao, CEO of Vestian, said, "The Indian office market has demonstrated resilience... Strong absorption has tightened vacancy rates and driven rental growth."

In terms of city performance, Bangalore led leasing activity, while Pune recorded its highest-ever quarterly absorption. Mumbai remained the most expensive office market, with average rents reaching INR 152.6 per square foot per month. Chennai saw a significant surge in construction completion volume due to a base effect.

The report indicates that the market is in a phase of realignment, with cautious construction supply amid geopolitical uncertainties, while sustained demand is expected to drive the next phase of growth.

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