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Over the next two years, Global Capability Centers (GCCs) will secure leases for about 45–50 million square feet of office space, representing approximately 40% of the aggregate office space demand across India's top six cities. Improved business sentiments and a positive economic outlook, especially among foreign companies seeking to establish their capability centres in the country, are driving this surge in demand. The GCC countries have firmly continued their expansion efforts in spite of challenges like the pandemic and geopolitical difficulties throughout the last 2-3 years.
Colliers' latest report indicates a 14% year-on-year increase in GCC leasing activity in 2023 alone, with the latter half of the year witnessing the highest leasing activity since 2020, reaching 12.4 million square feet. The report emphasises GCCs' crucial role in shaping India's commercial real estate landscape. Foreign companies, driven by cost-effective offerings and access to a talent-rich environment, are expected to support their presence in India, strengthening GCC demand in the near to mid-term.
Arpit Mehrotra, Managing Director of Office Services at Colliers India, asserts that with increased GCC activity and sustained domestic demand, the outlook for India's office market is optimistic. GCCs have swiftly resumed leasing activities and are expected to contribute over 40% of the total office demand in the next 1-2 years. Additionally, there is a growing interest from occupiers in the engineering, manufacturing, and healthcare sectors, promising further diversification of the GCC landscape. Moreover, GCCs are adopting flexible workspaces, with approximately 5–10% of flex seats currently being utilised, indicating a shift towards more agile workspace solutions.
Since 2020, GCCs in India's top six cities have leased 72 million square feet of office space, representing 39% of the total demand. US-based GCCs, mainly in the technology and BFSI sectors, led with a 71% share, followed closely by EU-based GCCs. Additionally, APAC-based technology and engineering firms witnessed an 8-fold increase in GCC establishments in 2023, reinforcing India's status as a prime GCC destination due to its skilled workforce, competitive costs, and improving regulatory framework.
The sectoral diversification trend will impact office space demand in the near and medium term, with Bengaluru and Hyderabad emerging as key GCC hubs, leading leasing activity, and capturing 60% of the market from 2020 to 2023. High-quality commercial developments, a robust talent pool, and strong educational infrastructure fuel this growth, rendering these cities prime locations for GCC expansions. Additionally, lower real estate and manpower costs in Tier I Indian cities boost India's competitiveness in the GCC landscape.
In the future, sub- and near-dollar micro markets will continue to play a vital role in GCC space acquisition in India, contributing nearly 80% of leasing activity. Demand focuses on quality assets across the SBDs of respective cities, with GCC occupiers equally valuing rental affordability and high-quality infrastructure. SBDs will continue as GCC epicentres due to their proximity to talent pools and business hubs, while increased interest is expected in PBDs, particularly from non-tech sectors. Overall, improved business sentiments and a positive economic outlook are meant to drive increased demand for office spaces, including GCCs, in the country.
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