Market Trends of India Office Real Estate Industry
IT and BPM Sectors Drive Demand for Office Space
In India, the office sector has witnessed a dynamic surge, attracting investments exceeding USD 3 billion, marking a 53% rise from the prior year. This upswing is largely fueled by the escalating demand from Global Capability Centers (GCCs) and vigorous leasing endeavors by Indian corporations, which presently constitute 46% of the overall market leasing activities.
The GCC model is also now evolving from primarily cost arbitrage/standardisation focused centers to customer experience and technology led hubs. Technology consistently drives the demand for office space leasing. Accounting for approximately 35% of the overall demand, the tech sector's influence surges beyond 40% in cities such as Bengaluru and Hyderabad. Bolstered by government infrastructure investments, the BFSI sector is flourishing. Meanwhile, the rise of hybrid work has spotlighted the importance of flexible workspaces. Additionally, engineering and manufacturing sectors have expanded, fueled by global supply chain realignments.
Bengaluru Leads the Boom for Office Real Estate
Bengaluru, India's IT capital, is projected to maintain its dominance in the country's commercial real estate market, boasting an office stock of 330-340 million sq. ft by 2030, as per the Confederation of Indian Industry. As of June 2024, the city's office stock has surged to over 223 million sq. ft, more than doubling from 100 million sq. ft from a decade ago. In H1 2024, transactions for office spaces exceeding 100,000 sq. ft surged by 54% year-on-year, climbing from 10.18 million sq. ft in H1 2023 to 15.69 million sq. ft in H1 2024. This growth positions the city as the leading hub for office space among all major cities in the country.
In the lead-up to 2030, Bengaluru's office market is poised to be primarily driven by the technology, engineering, manufacturing, and BFSI sectors. Additionally, life sciences, aviation, and the automobile industry are emerging as significant contributors to this demand surge. Currently, the technology sector dominates, accounting for 30-35% of the city's annual absorption, with a strong presence in the commercial hubs of Outer Ring Road and Whitefield.
Between 2022 and June 2024, Bengaluru commanded a dominant 41% share in the demand from GCCs in India. This achievement is attributed to Bengaluru's unique offerings: a skilled workforce, premium Grade-A assets, and a robust tech infrastructure.
