Robust Demand For Commercial Real Estate, Vacancy Rates At Lowest: Awfis Space MD

India’s commercial real estate market still has plenty of room to grow, with vacancy rates now at their lowest in several major cities, according to Amit Ramani, chairperson of Awfis Space Solutions.

The sector will continue to grow as urbanisation continues and more global capability centres and multinational companies come to India for IT outsourcing and local operations, and employees return to offices, Ramani said in an interview with NDTV Profit.

"India is still one of the least commercialised markets in the world. So there's a lot of growth ahead," the Awfis managing director said. "Vacancy rates are at their lowest in many places. Some cities have hardly any empty office space left."

The outlook for the commercial real estate market is extremely positive, Ramani said, describing last year as one of the best ever for Awfis.

"We did gross leasing of almost 80 million square feet and almost 20% of it was in the flexible workspace segment. You can see a 120-basis-point reduction year-on-year in vacancy. Places like Mumbai are down to about 12.5%. We sold about 54,000 seats in a single year," he said.

The first quarter of the year has been very strong. Almost 60% of deals involved leases of over 1 lakh square feet. Rentals have risen 7.5% to Rs 105 per square foot, according to Ramani. "It shows a long-term commitment to the Indian market."

The recent surge in return-to-office mandates has also provided strong tailwinds, particularly from large IT and IT-enabled services companies that had downsized during the pandemic, the Awfis chairperson said. "Bengaluru continues to be a major growth engine for Awfis, given its position as India’s tech capital."

"Almost 30–40% of the real estate was given up by large IT, ITES companies during the last four years. They are taking up space from us because they don't have enough space," Ramani explained.

Addressing concerns that the rise of artificial intelligence might dampen demand for GCCs and related services, Ramani said AI was more of a growth driver than a threat.

While acknowledging near-term uncertainties tied to global trade tensions and tariff risks, he said none of it has translated into pullbacks or hesitation on the ground.

"In the short term, there is a bit of uncertainty... I don't know what this tariff situation will lead to in the next 60–90 days, but on the ground, we are not seeing any changes," he said. "In fact, you know, companies are continuing to expand as we see it today."