Leasing by Global Capability Centres at all-time high, crosses 29 msf in 2024

New Delhi, January 6, 2025: Real estate consulting firm CBRE South Asia Pvt. Ltd on Monday announced the findings of its report, ‘CBRE India Office Figures Q4 2024’. As per the CBRE report, Global Capability Centres (GCC) maintained strong leasing in 2024 at 29.4 mn. sq. ft. with a share of 37 per cent of the overall leasing activity across the top 9 cities in India and registering about 29 per cent  Y-o-Y growth. Global firms have actively established and expanded their GCC operations by capitalising on the country’s skilled talent pool and a favourable business climate. This growth momentum is expected to persist into 2025, with new entrants setting up global centres and existing firms scaling their facilities.

Companies from sectors including Technology, Engineering and Manufacturing and BFSI would likely drive demand for both traditional and flexible office spaces for their GCCs, with continued demand from niche sectors such as automobile, semiconductors, and life sciences. In the October-December 2024 period, GCC leasing represented 34 per cent of the total leasing activity, amounting to 7.6 mn. sq. ft. Bengaluru led the GCC leasing segment with a 34 per cent share, followed by Hyderabad at 20 per cent, Delhi-NCR at 12 per cent, Mumbai at 11 per cent, Pune at 10 per cent, and Chennai at 9 per cent. Ahmedabad, Kolkata and Kochi together accounted for 4 per cent of the GCC leasing in Q4 2024.

On a pan-India basis, overall, office leasing recorded a historic high of 79 mn. sq. ft. in 2024 across nine cities. The absorption marked a 16 per cent Y-o-Y growth, setting a new benchmark for leasing activity. Total supply during CY 2024 stood at 52.3 mn. sq. ft.

Bengaluru dominated office space absorption during the year, accounting for approximately 28 per cent share of the total, followed by Hyderabad with 16 per cent and Mumbai with 15 per cent share. In 2024, approximately 52.3 mn. sq. ft. of new office space was completed, with Bengaluru, Hyderabad, and Pune collectively accounting for 67 per cent of the total supply addition.

Technology sector accounted for 24 per cent of the total leasing activity, followed by flexible space operators at 19 per cent, BFSI firms at 16 per cent, and engineering and manufacturing companies at 9 per cent.

Domestic firms continued to lead the space take-up in CY 2024, accounting for 45 per cent of the total office space absorption, followed by companies from the Americas at 34 per cent, EMEA at 16 per cent, and APAC at 5 per cent. The leasing activity by Indian firms was predominantly driven by flexible space operators, technology companies, and BFSI corporates.

On a quarterly basis, office leasing touched the highest ever in October-December 2024 at 22.2 mn. sq. ft. Mumbai, followed by Hyderabad and Bengaluru led the absorption, together accounting for about 66 per cent of the space take-up. In the October-December 2024 period, supply reached 16.1 mn. sq. ft, with Hyderabad, Bengaluru, and Pune contributing to much of the supply addition, collectively accounting for approximately 69 per cent.

In the quarterly breakdown, technology companies led office leasing with a share of 26 per cent, followed by flexible space operators (21 per cent) BFSI firms (17 per cent), research and consulting companies (10 per cent), engineering and manufacturing corporates (9 per cent), life sciences firms (7 per cent), and others (11 per cent).

The report indicates that in the October-December 2024 period, leasing in green-certified assets accounted for 56 per cent of total leasing activity, while the green-certified supply share was noted at 45 per cent. Hyderabad led the leasing activity in green-certified spaces with a 27 per cent share, followed by Bengaluru at 21 per cent, Mumbai at 19 per cent, Delhi-NCR at 12 per cent, Pune at 10 per cent, Chennai at 9 per cent, and Ahmedabad and Kolkata each at about 1 per cent share.

Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, Anshuman Magazine, said, “As we look towards 2025, the office sector in India is poised for continued growth, underpinned by sustained demand from a broad range of industries. The momentum seen in 2024 is expected to persist, with technology, BFSI, and engineering sectors, along with global capability centers (GCCs), driving the need for both traditional and flexible office spaces. Companies are increasingly prioritizing operational efficiency, which would further enhance demand for premium, future-ready assets that are designed to foster employee well-being and provide a competitive edge in talent retention.”

Ram Chandnani, Managing Director, Advisory & Transaction Services, CBRE India, said, “India’s office leasing market is expected to build on the strong foundation laid in 2024, with GCCs continuing to play a pivotal role in shaping demand. As we move into 2025, we foresee global firms expanding their operations in India, attracted by the nation’s skilled workforce and favourable business environment. Alongside this, sectors such as technology, BFSI, and emerging markets would further influence office leasing trends. The growing focus on sustainability and green-certified office spaces would drive the development of investment-grade assets, reinforcing long-term market stability and growth.”

Outlook

Office sector is poised for steady growth with demand uptick expected in 2025:

• Strong occupier confidence and steady inquiries indicate that demand for office spaces would remain stable in the first half of 2025.
• Expansionary activity across various sectors is expected to continue, though some occupiers may adopt a cautious approach, focusing on operational efficiency in their office space requirements.

GCCs and diversified demand to propel office sector’s growth trajectory

• Global firms actively established and expanded their GCC operations in India, leveraging the country’s skilled talent pool and favourable business climate. This growth momentum is expected to continue into 2025, with new entrants setting up global centers and existing firms scaling their facilities.
• Companies from sectors like technology, E& M, and BFSI are anticipated to drive demand for both traditional and flexible office spaces for their GCCs.
• Niche sectors such as automobile, semiconductors, and life sciences will also continue to contribute to the demand for office spaces.
• A diversified occupier base, fuelled by economic growth and strategic policy measures, will shape office space absorption trends in 2025.
• Leasing activity from sectors beyond technology, as well as increased contributions from emerging markets and the growth of domestic firms’ portfolios, will drive the office market.

Investment-grade supply to accelerate shift to future-proofed assets and enhanced employee experience

• India’s office supply pipeline is projected to remain robust in 2025, with the introduction of several high-quality, investment-grade assets.
• Bengaluru, Hyderabad, and Delhi-NCR are expected to lead the completions, followed by Pune, Mumbai, and Chennai.
• The government’s December 2023 policy allowing partial denotification of special economic zone (SEZ) assets is expected to provide more options for occupiers as such spaces enter the mainstream supply.
• Developers will continue to meet occupiers’ preferences by offering well-located, ‘future-proofed’ assets with state-of-the-art facilities and amenities.
• The growing demand for amenitized office spaces is driven by ‘flight to quality,’ as companies seek environments that attract and retain top talent and enhance employee experience.
• Occupiers are placing increasing emphasis on initiatives that improve employee wellness and satisfaction.
• Well-located, public transport-accessible buildings are likely to command premium rents, further aided by significant infrastructure upgrades across India’s top cities.
• The strong office leasing activity seen in 2024, along with the anticipated surge in 2025, is expected to drive upward pressure on rents across various micro-markets.

Green-certified buildings at the forefront of the growing emphasis on sustainability in office spaces

• Sustainability is expected to significantly influence office developments in 2025, with green building practices becoming increasingly common.
• LEED and IGBC-certified buildings are anticipated to become the standard, driven by the need for operational efficiency and regulatory compliance.
• Developers will focus on eco-friendly construction methods, sustainable materials, and energy-efficient designs to meet the demands of environmentally conscious investors and occupiers.
• Government initiatives, including tax incentives, are expected to encourage the adoption of sustainable real estate practices, making green development more appealing to builders.

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