Bengaluru, Hyderabad account for 60% total Global Capability Centres demand - Hindustan Times
close_game
close_game

Bengaluru and Hyderabad account for 60% of the total Global Capability Centres demand: Colliers

Feb 22, 2024 07:40 AM IST

Global Capability Centres to lease 45-50 msf of Grade A office space by 2025; GCCs steadily adopting flex spaces, with approximately 5-10% of flex seats

Southern cities like Bengaluru, Hyderabad, and Chennai have become key Global Capability Centre hubs, with Bengaluru and Hyderabad together leading the GCC leasing activity at a cumulative share of 60% from 2020 to 2023. Chennai saw a 2.4X surge in 2023, while Pune and Mumbai witnessed over 1.7X growth compared to 2022, a new report by Colliers has said.

Bengaluru, Hyderabad, and Chennai have become key Global Capability Centre hubs, said a Colliers report.(PTI Photo)
Bengaluru, Hyderabad, and Chennai have become key Global Capability Centre hubs, said a Colliers report.(PTI Photo)

GCCs or global in-house centres or captives, are offshore units of large multinationals performing technology operations.

HT launches Crick-it, a one stop destination to catch Cricket, anytime, anywhere. Explore now!

The attractiveness of Tier I Indian cities lies in the availability of quality commercial developments, strong talent pool and robust educational ecosystem making them ideal locations for expansionary activities of GCCs, the report said.

Also Read: Urban consumption driving growth of retail malls; office segment faces pressure due to global headwinds

Overall, the second half of 2023 saw resurgence in Global Capability Centres leasing activity, registering highest leasing since 2020 at 12.4 msf, according to Colliers' latest report, titled Global Capability Centers in India: A newfound wave of confidence.

The report highlights the pivotal role GCCs will continue to play in shaping India's commercial real estate landscape in near future. Over the next two years, GCCs are expected to lease about 45-50 million square feet of office space, accounting for approximately 40% of the total office demand across the top 6 cities. Top 6 cities include Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai, and Pune

Improved business sentiments and positive economic outlook is fostering heightened demand for office spaces in India, particularly signaling confidence among foreign origin companies seeking to establish their capability centers in the country.

Also Read: Office fit-out costs across India increase by 4.5% Year-on-Year: JLL

Interestingly, despite a weaker global outlook amidst pandemic and geopolitical tensions in the last 2-3 years, GCCs resumed their expansions in a steadfast manner, registering a 14% YoY rise in leasing activity in 2023, the report said.

GCC demand diversifies with surge in BFSI and engineering and manufacturing leasing activity

While the technology sector continued to dominate the overall GCC leasing activity during the 2020-23 period, BFSI and engineering and manufacturing firms saw significant traction in recent years. In 2023, the BFSI sector experienced a four-fold increase in GCC leasing activity, while the engineering and manufacturing sector saw a notable 1.6X rise compared to 2020.

This trend underscores a broader trend of sectoral diversification in the country's office market, which is likely to shape office space demand in the near- medium term, the report said.

Also Read: Brigade Group plans to launch more than 6.5 mn sq ft of housing projects in Bengaluru and Chennai; Invest 2700 cr

“With heightened GCC activity and sustained domestic demand, the outlook for India's office market is indeed optimistic. Drawing confidence from India's economic resilience, GCCs have swiftly resumed leasing activities, and are poised to play a pivotal role, contributing to over 40% of the total office demand in the next 1-2 years,” said Arpit Mehrotra, Managing Director, Office Services, Colliers India.

As technology and BFSI sectors maintain their dominance, growing interest of occupiers from engineering and manufacturing and healthcare sectors promise to diversify the GCC landscape further.

Sub or near dollar markets drive almost 80% of overall GCC leasing

Sub or near dollar markets drive almost 80% of overall GCC leasing activity in India, the report said, adding Although monthly office space rentals in rupee values have grown significantly over the years, the rental outflow for GCCs in India has remained relatively constant in terms of US dollar.

Noida Expressway is one of the most active GCC markets in Delhi-NCR and has almost 40% lower office rentals compared to the average monthly rentals in the city. Navi Mumbai is one of the few sub-dollar markets in Mumbai and corresponds to 39% of the GCC leasing activity in the city during 2020-2023 period, the report said.

Also Read: Mumbai real estate market: Here’s why listed realtors are making a beeline for redevelopment projects

Moreover, GCCs are steadily adopting flex spaces, with approximately 5-10% of flex seats currently being utilized by GCC occupiers, indicating a shift towards more agile workspace solutions, he said.

“Sub and near dollar micro markets remain pivotal for GCC space uptake in India, contributing nearly 80% of the leasing activity. With two-thirds of the demand concentrated in quality assets across secondary business districts of respective cities, GCC occupiers tend to give equal consideration to rental affordability and high-quality infrastructure," said Vimal Nadar, Senior Director and Head of Research, Colliers India.

Occupiers particularly from sectors like engineering and manufacturing and healthcare and pharma typically favour peripheral business districts (PBDs) owing to their significant lower rentals. Looking ahead, SBDs will remain GCC epicenters for their proximity to talent pools and business hubs, while PBDs will witness increased interest, especially from non-tech sectors, he said.

Unlock a world of Benefits with HT! From insightful newsletters to real-time news alerts and a personalized news feed – it's all here, just a click away! -Login Now!
SHARE THIS ARTICLE ON
Share this article
  • ABOUT THE AUTHOR
    author-default-90x90

    Vandana Ramnani is editor, real estate, HT Digital. She has reported extensively on residential and commercial real estate. She can be reached at vandana.ramnani@htdigital.in

SHARE
Story Saved
Live Score
OPEN APP
Saved Articles
Following
My Reads
Sign out
New Delhi 0C
Thursday, April 18, 2024
Start 14 Days Free Trial Subscribe Now
Follow Us On