Bagmane Prime Office

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Ujjaini Dutta

BENGALURU, May 14 (Reuters Breakingviews) - Artificial intelligence may be cutting jobs in India but its office leasing market is enjoying a temporary reprieve. Investors piled into the latest initial public offering of a Blackstone-backed BX.N real estate investment trust in Bengaluru, the outsourcing hub that hosts one quarter of the country's office stock. Units of Bagmane Prime BAGM.NS - whose tenants include Amazon AMZN.O, Alphabet's GOOGL.O Google and Samsung 005930.KS - opened up 4% on their debut on Thursday. Tight supply of commercial space will keep vacancies low and rents firm for a while yet in the $190 billion market.

India's offices logged record quarterly leasing volume at 30 million square feet for the three months to March, up 6% year-on-year, according to Knight Frank, nearly one-third of the record annual gross leasing volume of 83 million square feet in 2025. Sophisticated back offices of multinational companies, also known as global capability centres, accounted for 40% of last year's demand. Overall vacancy rates remain low at 14% and landlords across key cities such as Bengaluru and Hyderabad have seen rents increase by as much as 8% year-on-year.

But Bagmane's prospectus for its $357 million offering notes that AI-led workforce restructuring is prompting tenants to reassess space requirements: GCC headcount in India is expected to grow 7% a year through March 2030, a sharp slowdown from an 11% annual pace in the previous decade and a half, according to industry body Nasscom and JLL Research.

The comfort is that new completions for the quarter ended March 2025 were barely half of the space absorbed during the same period. What's more, companies spend heavily on fitting out offices so they can be slow to reduce their office space even after they shrink headcount. Bagmane's well-located portfolio in what it calls the "world's best performing micro-markets", including Bengaluru's highly-sought after Outer Ring Road, will offer a further cushion in the event of any slack in demand.

For now, India's leading publicly traded REITs are doing well. Embassy Office Parks EMBA.NS, Mindspace Business Parks MINS.NS and Brookfield India BROF.NS have outperformed the benchmark Nifty 50 stock Index .NSEI and local developer DLF DLF.NS by up to 26 and 35 percentage points over the past one year. Investors, though, will be watching closely for any sign the balance is shifting from landlords to renters.

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CONTEXT NEWS

Units of Blackstone-backed Bagmane Prime Office opened up 4% on May 14 following the real estate investment trust's initial public offering. The deal was nearly 24 times subscribed as of May 7, National Stock Exchange data showed.

The offering worth 34.05 billion rupees ($357 million) comprised new units worth 23.9 billion rupees and existing units 10.15 billion rupees by the selling unitholder, Blackstone.

(Editing by Una Galani; Production by Aditya Srivastav)

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