India’s office and workspace real estate sector is witnessing a significant boom, driven by rising demand from Global Capability Centres (GCCs), IT services companies, and flexible workspace providers. Key markets such as Bengaluru, NCR, Hyderabad, and Pune are emerging as hotspots, with the sector demonstrating resilience amid evolving occupier strategies focused on green-certified spaces and flexible work models.
A major boost to the sector is expected following the GST Council’s recent decision to slash tax rates on critical construction materials. Cement will now attract 18% GST instead of 28%, while materials such as marble, granite, travertine blocks, and sand-lime bricks will see a reduction from 12% to 5%.
Archana Naidu, Board Member and Head of Business at iKeva, said the move is poised to “provide a positive boost to India’s office and workspace sectors.”
Industry experts suggest that construction and finishing materials account for 10–30% of overall project costs. The tax reduction is projected to cut total development costs by 3–5%, improving project viability and margins, particularly for co-working operators.
“With co-working providers investing heavily upfront, the reduced GST burden eases working capital constraints,” Naidu explained. “It enables faster expansion and allows operators to offer more competitive pricing to clients.”
The cost savings are also likely to ease rental pressures, giving organized developers a competitive edge in a fast-growing market. Additionally, the simplified GST structure—now featuring just two primary slabs of 5% and 18%—is expected to reduce administrative hurdles and classification disputes, making tax compliance easier for developers and operators.
However, some industry players caution that the benefits may be partially offset as Input Tax Credit (ITC) does not apply to rental payments, and local levies could dilute the overall gains.
Market analysts predict that the reforms will further encourage new office developments, particularly in the co-working and flexible office segments, enhancing affordability and overall financial manageability.
The GST cut comes at a time when India’s office and workspace sector is poised for sustained growth, driven by evolving corporate real estate strategies and increasing investments in flexible, sustainable work environments.
