The Grade-A office market in the Delhi National Capital Region (NCR) continues to demonstrate strong fundamentals, driven by sustained leasing demand that is outpacing new supply. Occupancy levels are on a steady upward trajectory and are projected to rise to 80.5-81.0% by March 2027, according to a market analysis by ICRA.

The market has witnessed a significant turnaround since March 2023, with occupancy increasing by 600 basis points to reach 78.6% by September 2025. This growth is underpinned by consistent net absorption exceeding fresh supply since FY2023.

In FY2025, while fresh supply stood at 7.4 million square feet (msf), net absorption was a robust 11.4 msf. This trend persisted into the first half of FY2026, with 7.3 msf of new supply against a net absorption of 8.0 msf. The demand is primarily fueled by healthy leasing activity from the consulting and IT-BPM sectors.

Looking ahead, despite an expected new supply of approximately 14 msf in FY2026 and around 11 msf in FY2027, the continued healthy leasing momentum is expected to further tighten the market. Occupancy is forecast to reach 78.5-79.0% by March 2026 before climbing to the 80.5-81.0% range by March 2027. Notably, a significant portion of the upcoming supply is already committed, with nearly 31% of the approximately 17.5 msf expected during H2 FY2026–FY2027 period being pre-leased.

Delhi NCR remains a critical office hub, accounting for 20% (approximately 204 msf) of the total Grade-A office space across India’s top six cities. Gurugram is the undisputed leader within NCR, commanding a 60% market share, followed by Noida and Delhi. Key micro-markets such as Sector 24 (Cyber City), Sector 62 (Noida), and Sector 48 (Gurugram) collectively account for 17% of the city’s total office supply. Vacancy is set to remain low in Sector 24 (Cyber City) due to no new supply, while Sector 62 and Sector 48 are projected to see a reduction in vacancy levels, driven by steady absorption and limited new additions.

While the market exhibits overall strength, vacancies in Delhi NCR are the highest among India’s top six cities. This is largely attributed to lower occupancy rates of 50-55% in the peripheral business districts (PBD) of Gurugram, where some older assets have moderate occupancy levels. The market structure is diverse, with the top 10 developers collectively holding 40% of the city’s Grade-A office stock, indicating the presence of many regional players. In terms of growth, the Delhi NCR office stock recorded a Compound Annual Growth Rate (CAGR) of nearly 6% between FY2018 and FY2025, slightly lower than the 7% CAGR observed across the top six cities.

Supported by the positive demand-supply dynamics, ICRA expects the average rental rate for the Delhi NCR market to increase by 3-4% in FY2026.

On the overall India front, ICRA notes that despite global headwinds, including policy tightening and trade restrictions in the US, office leasing activities in India have remained buoyant in H1 FY2026. However, ICRA will closely monitor the situation as macroeconomic and geopolitical factors evolve.