The office market in Delhi-NCR is experiencing a robust recovery, with occupancy levels projected to surpass 80% by March 2027. This positive outlook is driven by sustained demand, particularly from the IT-BPM and consulting sectors, coupled with a healthy balance between new supply and net absorption.
A recent report by ICRA, a rating agency, indicates that the Grade-A office market in Delhi NCR continues to strengthen. Occupancy rates have steadily improved since March 2023, rising by 600 basis points to reach 78.6% by September 2025. This growth is primarily attributed to net absorption exceeding fresh supply over the past few years. In FY2025, net absorption reached 11.4 million sq ft, significantly outpacing the new supply of 7.4 million sq ft. The trend continued into the first half of FY2026, with net absorption at 8.0 million sq ft against new supply of 7.3 million sq ft.
ICRA projects occupancy to reach 78.5-79.0% by March 2026, before crossing the 80% threshold in FY2027, reflecting the continued demand momentum. Despite an anticipated addition of approximately 14 million sq ft of supply in FY2026 and 11 million sq ft in FY2027, strong leasing activity is expected to maintain market tightness. Notably, a significant portion of the upcoming supply is already pre-leased; approximately 31% of the 17.5 million sq ft expected between H2 FY26 and FY27 has been pre-booked. This pre-leasing activity is expected to support occupancy growth and prevent sharp increases in vacancy rates.
Delhi NCR remains a key office hub in India, accounting for nearly 20% of the country's total Grade-A office stock across the top six cities, which translates to approximately 204 million sq ft. Within the NCR, Gurugram dominates the market with a 60% share, followed by Noida and Delhi. Key micro-markets, including Cyber City (Sector 24, Gurugram), Sector 62 (Noida) and Sector 48 (Gurugram), collectively account for 17% of the region's total office supply.
The sustained demand for office space is primarily driven by the expansion of the IT-BPM and consulting sectors in the region. This indicates a healthy business environment and a growing need for quality commercial spaces.
While the overall outlook is positive, vacancies are the highest in Delhi NCR compared to the top six cities in India due to low occupancy of 50 to 55 percent in peripheral business districts (PBD) of Gurugram. Some old assets with moderate occupancy levels contribute to the elevated vacancy rates. However, ICRA anticipates an average rental rate increase of 3-4% for the Delhi NCR market in FY26. Between FY2018 and FY2025, the Delhi NCR office market recorded a CAGR of nearly 6%, slightly lower than the 7% CAGR observed across India's top six cities.
