Written By: Bandana Gupta

India's commercial real estate market is undergoing significant changes, driven by economic growth, better infrastructure, and shifting business demands. With 2025 around the corner, businesses, investors, and developers need to understand the size of this market and keep up with the latest trends shaping its future. India's commercial real estate franchise market is poised for significant growth in 2025, with a projected market size of USD 106.05 billion by 2029. 

Growing Drivers Behind the Expansion of the Commercial Real Estate Franchise Sector:

Economic Progress and Urbanization:

India's robust economic growth is leading to higher incomes, increased investments, and a rise in business activity across sectors. At the same time, rapid urbanization is transforming cities into bustling hubs of commerce, with improved infrastructure and connectivity playing a crucial role. This combination of economic progress and urban development is significantly boosting the demand for commercial properties to support offices, retail spaces, and other business needs.

Infrastructure Development:

Government efforts to improve infrastructure, such as building metro rail systems, expressways, and airports, are making cities better connected. These projects make it easier for people and goods to move around, saving time and reducing travel hassles. Better connectivity attracts businesses by offering smoother logistics, more convenient access to customers, and improved quality of life for employees. As a result, more companies are choosing to set up offices and expand operations in these well-connected areas.

Evolving Business Needs:

The demand for modern office spaces is growing because of the rise in co-working spaces, flexible offices, and hybrid work styles. Businesses want spaces that can easily adjust to their needs, like shared areas or customizable layouts. These offices also have useful technology like fast internet and smart tools for meetings. Companies choose these spaces because they are cost-effective, convenient, and support a better work-life balance.

IT and Startup Sectors:

The rapid growth of the IT and startup sectors is driving high demand for modern office spaces in tech hubs like Hyderabad and Bangalore. These businesses seek flexible layouts, advanced facilities, and technology to support innovation and collaboration, reshaping the commercial real estate market in these cities.

Foreign Direct Investment:

Foreign direct investments (FDI) are set to give a strong push to the commercial real estate market. As global companies continue to expand their operations in India, their investments bring in much-needed capital to develop advanced office spaces, retail centres, and other commercial properties. This influx of funds not only helps in creating high-quality infrastructure but also boosts employment and strengthens the economy.

Institutional Investment:

Institutional investors, such as pension funds and Real Estate Investment Trusts (REITs), are showing a growing interest in the commercial real estate market. These investors bring significant financial resources, which are being channelled into developing and acquiring high-quality commercial properties like office spaces, shopping complexes, and warehouses. Their involvement reflects confidence in the long-term growth potential of this sector, driven by India's expanding economy and increasing urbanization.

Sustainability:

ESG (Environmental, Social, and Governance) factors are influencing the way commercial properties are being developed. Builders are focusing on getting green certifications and creating eco-friendly, sustainable designs. These efforts aim to appeal to businesses and customers who care about the environment and prefer spaces that align with their values of sustainability and responsibility. This shift not only helps protect the planet but also makes properties more attractive to a growing market of environmentally conscious buyers and tenants.

Major Trends in India's Commercial Real Estate Franchise Sector

Growth of Flexible Office Spaces

Flexible workspaces, such as coworking and managed offices, are becoming increasingly popular, growing at 30% each year, because they are cost-effective and easily adaptable. Cities like Bangalore, Hyderabad, and Gurgaon are at the forefront of this trend, with many new coworking spaces opening in key business areas. This growth is largely driven by the hybrid work culture, where employees split their time between remote work and office-based work.

Smart Offices and GCC Growth :

Workplaces are becoming smarter with automation, AI tools, and IoT devices, making work easier and cutting costs. Global Capability Centers (GCCs) are expanding fast, especially in cities like Bangalore, Hyderabad, and Chennai. Over 60% of Fortune 500 companies have GCCs in India, driving demand for tech-enabled, high-quality office spaces. At the same time, developers are focusing on green and sustainable buildings to meet environmental goals.

Rising Demand for Eco-Friendly Buildings:

Sustainability has become a top priority in commercial real estate. By 2025, the demand for green-certified office spaces is expected to grow by 20% as businesses see the lasting benefits of energy-efficient and eco-friendly buildings. In cities like Mumbai and Delhi, many new projects are using renewable energy, water-saving systems, and sustainable materials. Tenants are even ready to pay more for these properties because they not only help the environment but also save on long-term costs.

Growing Commercial Opportunities in Smaller Cities:

As Tier 1 cities become crowded and expensive, businesses are moving to Tier 2 and Tier 3 cities like Jaipur, Indore, and Kochi. These cities provide cheaper real estate, talented workers, and better infrastructure.

Government programs like Smart Cities and AMRUT are helping these smaller cities grow into business hubs. With more IT companies and startups setting up here, the demand for office spaces in these areas is increasing steadily.

Shift Towards Compact Office Spaces

After the pandemic, many companies have reduced their office sizes because of hybrid work and cost-saving plans. This has increased the demand for smaller office spaces, especially in city centres.

Landlords and builders are now creating compact, flexible office designs that suit the needs of modern businesses. For example, plug-and-play offices, which are fully furnished and ready for use, are becoming popular in cities like Bangalore and Gurgaon.

At the same time, foreign investments and Real Estate Investment Trusts (REITs) are contributing to the growth of commercial real estate.

Growing Role of Foreign Investments and REITs :

International investors are increasingly interested in India's office space market. Real Estate Investment Trusts (REITs) have made it simple for both individuals and institutions to invest in commercial properties.

REITs focusing on office spaces have shown steady returns and offer investors a chance to diversify their portfolios. This trend is expected to grow further in 2025, with more REITs likely to be introduced. Additionally, foreign investors are actively investing in India's commercial hubs, bringing in more funds and strengthening the sector.

Improved Connectivity Driving Office Space Growth:

New metro rail projects, expressways, and airports are making cities better connected, attracting more businesses. Areas near these projects, like Hyderabad, Noida, and Kolkata, are seeing a rise in demand for office spaces.

New Trends in Office Leasing:

Office leasing is changing to meet the needs of modern businesses. Flexible lease agreements and shorter rental periods are now common, helping companies adjust to uncertain market conditions.

Landlords are adding extra features and offering customization options to attract tenants. In cities like Bangalore and Mumbai, there is a rising demand for office spaces. Moreover, to fit a company's style and work needs.

Overcoming Challenges in the Commercial Real Estate Franchise Market Industry:

India's real estate market has a bright future, but it also faces some challenges like complex regulations, increasing material costs, and global economic pressures. However, with timely actions from the government and industry leaders, these challenges are manageable effectively to ensure steady growth.

Challenges in Urban Commercial Real Estate Affordability Issues:

Increasing construction costs and gaps in affordability are creating challenges for some parts of the market, making it harder for businesses to find cost-effective spaces.

Limited Supply:

Even though demand is high, some urban areas face a shortage of available commercial spaces, which can slow down growth.

Balancing Demand and Supply:

There is a pressing need to match the rising demand for office spaces with an adequate supply to ensure sustainable growth in India's commercial real estate sector.

Future Growth of the Commercial Real Estate Franchise Sector:

India's real estate future looks bright, with rising demand for homes, offices, and retail spaces as cities grow. Real Estate Investment Trusts (REITs) have made it simpler for investors to access and benefit from commercial real estate.

• The future of India’s real estate market looks very promising with rapid urban growth.
• Smart and sustainable living solutions.
• Top real estate companies are driving progress through continuous innovation.
• Strong domestic demand and rising income levels are key drivers of growth.
• Government initiatives focused on infrastructure development are boosting the sector.
• Investors who choose the right locations are likely to benefit from the growing market.
• The next decade offers exciting opportunities in India’s evolving real estate landscape.

Conclusion :

India's commercial real estate market is entering an exciting phase in 2025. Further, driven by flexibility, technology, sustainability, and expansion into new cities. Office space demand expects to cross 50 million square feet, highlighting the sector's strong growth potential.

For investors and consultants, 2025 offers great opportunities to benefit from these trends. By focusing on emerging markets, eco-friendly projects, and smart, tech-equipped office spaces, they can stay ahead. Also, make the most of this evolving market. At FranchiseBazar, entrepreneurs can discover the best real estate franchise in India as per their interest and investment. Also, those which has a great market for their location

Disclaimer: The brands mentioned in this blog are the recommendations provided by the author. FranchiseBAZAR does not claim to work with these brands / represent them / or are associated with them in any manner. Investors and prospective franchisees are to do their own due diligence before investing in any franchise business at their own risk and discretion. FranchiseBAZAR or its Directors disclaim any liability or risks arising out of any transactions that may take place due to the information provided in this blog.