Mumbai tops housing market in 2025; office leasing second-highest in over a decade: Knight Frank

Mumbai (Maharashtra) [India], January 10 : Mumbai consolidated its position as India's largest residential real estate market in 2025 while recording the second-highest office leasing volume in more than a decade, according to Knight Frank India's latest report.

In its India Real Estate: Office and Residential Market, July-December 2025 (H2 2025) report, Knight Frank India said Mumbai closed the year with 9.8 million sq ft of office leasing, despite a 5 per cent year-on-year decline, making 2025 the second-strongest year for commercial absorption in over ten years.

Leasing activity in the second half stood at 4.3 million sq ft, supported by large-format transactions in scalable suburban locations.

Global Capability Centres (GCCs) emerged as the dominant demand driver, with their share of office leasing rising sharply from 9 per cent in H2 2024 to 27 per cent in H2 2025, led by BFSI, technology and engineering firms.

India-facing occupiers remained the largest segment at 40 per cent, though significantly lower than the 72 per cent share recorded a year earlier.

Third-party IT and ITeS firms also increased their footprint, accounting for 20 per cent of leasing, primarily in cost-efficient suburban hubs such as Andheri East, Goregaon, Airoli and Thane.

Rental values continued to firm up, with average transacted rents rising 6 per cent year-on-year to Rs 125 per sq ft per month, supported by quality-driven demand and limited new supply.

Vacancy levels remained stable at 18.3 per cent, even as new completions declined 12 per cent annually.

Gulam Zia, International Partner, Senior Executive Director, Research, Advisory, Infrastructure and Valuation, Knight Frank India, said, "Mumbai's office market continues to demonstrate long-term stability, with 2025 recording the second-highest annual leasing volume in over a decade. The most compelling story is the rapid rise of GCCs, whose market share nearly tripled this year as global firms leverage Mumbai's deep talent pool for high-end analytics and shared services."

On the residential front, Mumbai registered annual home sales of 97,188 units, marking a 1 per cent year-on-year increase, while H2 2025 sales rose 3 per cent to 50,153 units. Average residential prices climbed 7 per cent annually to Rs 8,856 per sq ft, reflecting steady end-user demand and controlled supply.

Knight Frank noted a visible shift away from the affordable housing segment, with demand increasingly concentrated in higher ticket sizes, particularly the Rs 2-5 crore category.

Improved infrastructure connectivity, including the operationalisation of Metro Line 3 and the Mumbai Trans Harbour Link, continued to support demand in peripheral and suburban markets, the report added.

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