India's Global Capability Centres Drive Surge in Office Space Leasing

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India's Global Capability Centres Drive Surge in Office Space Leasing

Team Finance Saathi

29/May/2024

Key Points:

1: Office space leasing by global capability centres (GCCs) in India increased by 17% YoY in FY24, reaching 22.5 million sq. ft, driven by sectors such as engineering, manufacturing, and financial services.
2: GCCs accounted for 29% of all office leasing in India in the January-March quarter of FY24, with CBRE projecting significant leasing at 40-45 million square feet between 2024 and 2025.
3: Factors such as India's strategic emphasis on digital technology, competitive costs for talent and rentals, and a growing demand for premium office spaces are driving the growth of GCCs in the country.

India's global capability centres (GCCs) are at the forefront of driving a surge in office space leasing, with a remarkable 17% year-on-year increase witnessed in the fiscal year 2024. This surge is particularly notable in sectors such as engineering, manufacturing, and financial services, reflecting the evolving landscape of corporate operations in the country. According to data provided by real estate consultancy CBRE South Asia, total leasing by GCCs reached 22.5 million square feet in FY24, marking a significant uptick from the 19.2 million square feet recorded in FY23.

In the dynamic landscape of office leasing trends, GCCs have emerged as key players, with their contribution to the market becoming increasingly significant. In the January-March quarter alone, GCCs accounted for a notable 29% of all office leasing activities in India. Looking ahead, CBRE projects a substantial increase in leasing activity by GCCs, with estimates ranging between 40-45 million square feet between 2024 and 2025. This projection underscores the growing importance of GCCs in India's commercial real estate sector and highlights their role as major drivers of demand for office spaces.

Several factors contribute to the robust growth of GCCs in India. One of the primary drivers is the strategic emphasis placed by the country on digital technology. India's prowess in the digital domain, coupled with its competitive costs for talent and rentals, makes it an attractive destination for global corporations seeking to establish or expand their GCCs. Additionally, India's vast talent pool, particularly in fields related to engineering, technology, and finance, serves as a significant asset for GCCs looking to tap into skilled resources for their operations.

Anshuman Magazine, Chairman and Chief Executive Officer (India, South-East Asia, Middle East, and Africa) at CBRE, highlighted India's strategic advantages in fostering the growth of GCCs. He emphasized the country's commitment to upskilling talent in existing and emerging roles, as well as fostering greater synergies between the private sector and educational institutions. This concerted effort aims to drive value creation in India's corporate ecosystem and position the country as a preferred destination for global businesses seeking to establish their presence.

Furthermore, as occupiers increasingly prioritize quality and employee satisfaction, there is a growing demand for premium office spaces that offer modern amenities and enriching experiences for the workforce. This trend underscores the importance of investing in high-quality office spaces that not only meet the functional requirements of GCCs but also provide tailored and engaging workplace environments. Such investments are crucial for attracting and retaining top talent, fostering innovation, and driving productivity within GCCs.

In conclusion, India's global capability centres are witnessing a significant shift in trajectory, driven by a confluence of factors including digital technology adoption, competitive costs, and a growing emphasis on quality workplace environments. As the country continues to evolve as a hub for GCCs, it is poised to experience further growth in office space leasing, with significant implications for the commercial real estate sector and the broader economy.

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India's Global Capability Centres Drive Surge in Office Space Leasing

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