Mumbai, Dec 22: Knight Frank today released its annual Asia-Pacific Outlook 2026, revealing India’s continued strength as a strategic growth market despite global economic uncertainty, shifting trade policies and the broader regional slowdown. While the Asia-Pacific economy is expected to moderate in 2026, India stands out for its robust domestic fundamentals, deep talent base, and maturing real estate ecosystem.
India Office Market: Momentum Continues as Quality and Flexibility Take the Lead
India enters 2026 with one of the strongest office market outlooks in the region. GCC-led expansion, strong tech-sector hiring and a deep pool of skilled talent helped India record one of APAC’s highest leasing volumes in 2025, with the country on track for a historic year of occupier activity. Bengaluru, Mumbai and National Capital Region (NCR) continue to outperform, with rental growth expected to range between 7.5–9% YoY in 2026, placing India among the top regional performers. The national office landscape also crossed a major milestone in 2025, surpassing 1 billion sq ft of Grade A-led stock across the top eight cities.
Reflecting on the findings, Shishir Baijal, International Partner, Chairman & Managing Director, Knight Frank India, said, “India continues to stand out as a strategic growth market. The country’s affordability, depth of talent, regulatory stability and a maturing workplace ecosystem enhance its appeal relative to other global hubs. We expect office leasing to reach a new peak in 2025, with gross leasing volumes crossing 80 million square feet. Further, this momentum is expected to continue into 2026, supported by a comparatively robust domestic business environment and resilient occupier sentiment.”
A major theme for 2026 is the growing emphasis on retrofitting and asset repositioning. With early-2000s office buildings approaching functional obsolescence, landlords are accelerating investments in HVAC upgrades, natural light improvements, workplace experience technologies and ESG-led enhancements. This shift is driven by a clear message from occupiers: they are willing to pay for performance, sustainability and employee well-being rather than for space alone.
Flexibility is expected to take on even greater importance in the coming year. Against the backdrop of global trade uncertainty and cautious capital deployment, enterprises are likely to prioritise shorter leases, expansion-ready floors, managed office formats and hybrid-fit solutions. India’s cost competitiveness — with rentals still under USD 1/sq ft/month in several major markets — strengthens its role as a strategic consolidation hub for multinational firms seeking operational depth and financial prudence.
At the same time, the divide between high-quality developments and the rest of the market will become more pronounced. As Grade A stock accounts for more than half of total supply and vacancies tighten, occupiers are consolidating into new-generation, ESG-aligned and digitally enabled campuses. Older buildings that do not undergo substantive upgrades risk being priced out of consideration, deepening the polarisation between future-ready assets and those that fall behind.
India’s relative strength in 2026 is accentuated when compared with conditions across other major Asia-Pacific markets. In Greater China, office markets continue to face elevated vacancy and downward rental pressure as new supply coincides with cautious occupier sentiment and slower capital deployment. Singapore and parts of Southeast Asia, while structurally sound, are navigating a phase of rental moderation as occupiers prioritise cost control and shorter commitments amid a substantial development pipeline. Australia’s major office markets, particularly Sydney and Melbourne, remain tenant-favourable, with demand constrained by high occupancy costs and a cautious corporate expansion cycle. Against this backdrop, India stands apart as a structurally demand-driven market, supported by sustained GCC expansion, strong domestic consumption and a deep, cost-competitive talent pool. Limited oversupply in India’s core office hubs, steady rental growth and continued absorption of Grade A space point to a healthier supply-demand balance than many regional peers. This combination of affordability, scale, regulatory stability and occupier-led growth positions India as one of the most resilient and efficiently functioning real estate markets in Asia-Pacific as others continue to recalibrate.Bottom of Form
Logistics & Industrial: India Remains the Brightest Spot in APAC
In logistics, while rental growth in China remains under pressure due to elevated vacancies and Australia’s markets are normalising after a strong upcycle, India continues to outperform with sustained occupier demand, manufacturing-led expansion and consistent rental growth across its core logistics hubs. India continues to be the standout logistics performer in Asia-Pacific. While the broader region saw logistics rents flatten in 2025, India experienced sustained occupier expansion supported by manufacturing growth, resilient exports and the widening adoption of China+1 strategies. Bengaluru, Mumbai and NCR are projected to see around 5% rental growth in 2026, outpacing most regional peers once again. India’s growing influence in global supply chains is underpinned by government-led incentives, infrastructure upgrades and deepening investment interest across electronics, automotive and other industrial sectors. As companies optimise for resilience and diversification, India’s skilled workforce, rising domestic consumption and strategic location make it a compelling long-term logistics base.
APAC Market heading to recalibration in 2026
Across Asia-Pacific, 2026 is shaping up to be a year defined by recalibration rather than retreat. While trade tensions and tariff-related pressures are expected to moderate regional GDP growth, the fundamentals underpinning APAC real estate remain structurally strong. Deepening intra-regional trade, accelerating AI-driven investment, and the rise of new economic clusters continue to attract global capital and occupier demand. The region’s office and logistics sectors are entering the year with ample supply and highly selective leasing momentum, with occupiers gravitating toward flexible, future-ready, and operationally resilient spaces. As APAC markets navigate geopolitical uncertainty, the emphasis is shifting from expansion at scale to precision, performance and long-term value creation. Commenting on the evolving landscape,
Tim Armstrong, Global Head of Occupier Strategy and Solutions, Knight Frank Asia-Pacific, said, “Economic volatility, geopolitical instability, and digital acceleration are reshaping occupier priorities. In 2026, it won’t be about choosing between cost control and transformation — it will be about delivering both. The most effective leasing decisions will anticipate disruption and embrace flexibility backed by proven operational infrastructure.”
Why India Stands Apart in 2026
Despite global volatility, India’s trajectory is anchored in structural strength rather than cyclical recovery. Domestic demand, policy stability and a resilient economic climate continue to drive confidence across asset classes. The country’s expanding institutional depth, demonstrated through record office and logistics performance, is further supported by its ability to attract global capability centres and high-value enterprises. India’s maturing investor landscape, reinforced by stronger governance and transparent market practices, offers clarity and consistency in a world marked by uncertainty. Together, these factors position India as one of the most strategically important real estate markets in Asia-Pacific in 2026 and beyond.
