Global Capability Centres (GCCs) have emerged as a major force in India's commercial real estate market, accounting for a significant portion of office space leasing in recent years.

Jul 09, 2024
GCCs driving office leasing

Global Capability Centres (GCCs) have emerged as a major force in India's commercial real estate market, accounting for a significant portion of office space leasing in recent years. In 2023, GCCs leased around 35% of total office space in India, up from 25% in 2022. This trend is particularly pronounced in Bengaluru, which has consistently been a top destination for GCCs. Some key data points:

  • GCCs accounted for around 37% of total office leasing in India during the first half of 2024, leasing 11.9 million sq ft of office space.
  • Bengaluru had the highest share of GCC leasing at 39% during Jan-Jun 2024, followed by Pune at 20%, Hyderabad at 17%, and Chennai at 11%.
  • Since 2020, GCCs have leased about 72 million sq ft of office space across the top 6 cities in India, accounting for 39% of the total office demand during the period.
  • US-origin GCCs, primarily belonging to Tech and BFSI sectors, dominated this demand with 71% share, followed by EU based GCCs.
  • Bengaluru and Hyderabad together account for 60% of the total GCC demand from 2020 to 2023.

The growing prominence of GCCs in the office leasing market is driven by several factors:

Availability of skilled workforce at affordable costs

India's large talent pool, particularly in technology and services, makes it an attractive destination for GCCs looking to tap into a cost-effective and skilled workforce.

Real estate cost arbitrage

Compared to other global hubs, India offers significant cost advantages in terms of real estate and overall cost of living, making it a compelling location for GCCs.

Improving regulatory framework

The Indian government has been proactive in creating a favourable business environment and improving the regulatory framework to attract foreign investments and GCCs.

Diversification of sectors

While the technology sector has traditionally dominated GCC leasing, sectors like BFSI and engineering & manufacturing have seen significant growth in recent years. In 2023, the BFSI sector experienced a four-fold increase in GCC leasing activity, while the engineering & manufacturing sector saw a 1.6X rise compared to 2020.

Looking ahead, the outlook for GCC-driven office leasing in India remains positive. It is projected that GCCs will potentially drive the office market in the next decade, with an estimated 2,400 GCCs across India by 2030. By 2025, 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.

As the city with the highest share of GCC leasing in India, Bengaluru is poised to see significant growth in office space demand from global capability centres. Some of the key localities in Bengaluru that are likely to benefit include:

  • Outer Ring Road (ORR): The Outer Ring Road corridor, which includes areas like Marathahalli, Sarjapur Road, and Bellandur, has traditionally been a hub for technology companies and GCCs. With its well-developed infrastructure, availability of large office spaces, and proximity to residential areas, the ORR is expected to continue attracting a significant portion of GCC leasing activity in Bengaluru.
  • Electronic City: This industrial area on the outskirts of Bengaluru has emerged as a preferred location for GCCs, particularly those in the technology and engineering sectors. With its well-developed infrastructure, availability of affordable housing, and proximity to the airport, Electronic City is likely to see continued demand from GCCs.
  • North Bengaluru: Areas like Hebbal, Yelahanka, and Devanahalli, which are home to the Kempegowda International Airport, are expected to attract GCCs looking for easy accessibility and proximity to the airport. The availability of large land parcels and the development of infrastructure projects like the Peripheral Ring Road are likely to drive GCC leasing in North Bengaluru.
  • Central Business District (CBD): While the CBD, which includes areas like MG Road and Residency Road, has traditionally been a hub for BFSI firms, it is also attracting GCCs looking for premium office spaces and proximity to amenities. The availability of high-quality office spaces and the presence of luxury residential and retail developments are likely to drive GCC leasing in the CBD.
  • Whitefield: This IT hub in East Bengaluru has been a popular location for GCCs, particularly those in the technology sector. With its well-developed infrastructure, availability of large office spaces, and proximity to residential areas, Whitefield is expected to continue attracting GCC leasing activity.

As Bengaluru continues to attract a significant share of GCC leasing, these localities are poised to benefit from the increased demand for office spaces, driving growth in the real estate sector and creating employment opportunities for the local population.

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