India's office and residential property markets moved in different directions in the first half of 2026, with commercial real estate maintaining near-record leasing activity while the housing market entered a phase of consolidation, according to Knight Frank India's H1 2026 report. While Global Capability Centres (GCCs) remained the biggest driver of office demand, residential sales held steady as premium homes accounted for more than half of all transactions.
Office leasing across eight major cities stood at 48 million square feet during January-June, down 2 per cent from the record level a year earlier but marking the second-highest first-half performance on record. Residential sales rose 1 per cent year-on-year to 171,471 units, while launches increased 4 per cent to 187,350 units, reflecting steady housing demand despite a moderation in growth.
"India's office market has once again demonstrated its structural resilience by sustaining near-record leasing volumes despite one of the most uncertain global business environments in recent years," Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India, said. He said continued GCC expansion, strong domestic economic fundamentals and India's growing role in global corporate supply chains supported occupier demand.
Commercial Market Defies Global Headwinds
GCCs leased 20.6 million square feet during H1 2026, accounting for 43 per cent of total office transactions, the highest share recorded for the segment in any half-year. Bengaluru accounted for 41 per cent of GCC leasing activity, followed by Mumbai and Hyderabad with 16 per cent each.
Office completions increased 35 per cent year-on-year to 27.1 million square feet, taking the country's office stock to more than 1.05 billion square feet. Vacancy declined to 14.6 per cent as leasing continued to exceed new supply. Mumbai recorded its highest-ever first-half office leasing at 7.3 million square feet, while Pune and Hyderabad posted 29 per cent annual growth.
The report said Grade A assets accounted for 91 per cent of office leasing during the period, reflecting occupiers' preference for high-quality workspaces. Flexible workspace operators increased their share to 24 per cent of total transactions as companies continued to adopt hybrid workplace strategies.
Viral Desai, International Partner and Senior Executive Director, Occupier Strategy & Solutions, Industrial & Logistics, Capital Markets and Tenant, Knight Frank India, said GCC expansion and the growing use of flexible workspaces continued to support office demand despite global economic uncertainty.
Housing Demand Shifts Upmarket
The residential market remained stable but entered a phase of consolidation after four years of post-pandemic growth. Sales remained among the highest recorded in the past decade, while launches continued to outpace sales, taking unsold inventory to 525,695 units. Inventory levels remained at around six quarters of sales, indicating a broadly balanced market.
Demand continued to shift towards higher-value homes, with properties priced above Rs 1 crore accounting for 54 per cent of total sales, up from 49 per cent a year earlier. The report also showed the age of unsold inventory declined to 13.5 quarters from 14.3 quarters, indicating that older inventory continued to be absorbed even as overall stock levels increased.
Commenting on the residential market, Baijal said strong macroeconomic fundamentals, urbanisation and infrastructure investment continued to support housing demand, while premium homes reflected changing buyer preferences and rising household incomes.
Gulam Zia, International Partner and Senior Executive Director, Research, Advisory, Infrastructure and Valuation, Knight Frank India, said homebuyers are increasingly prioritising project quality, infrastructure, developer credibility and long-term value, making the quality of demand more important than transaction volumes alone.
The report indicates that India's commercial and residential property markets are moving through different stages of the cycle. While office demand continues to be supported by GCC expansion and multinational occupiers, residential demand is increasingly being driven by premium housing as the market transitions to a slower but more stable growth phase. |
