Global Capability Centres (GCCs) are likely to lease office space of around 60-62 mn. sq. ft. of space between 2023-25. Sectors including technology, BFSI and engineering & manufacturing will lead leasing activity, while sectors such as life sciences, automobiles, and aviation will also expand their GCC operations in India, said a new report.
CBRE South Asia, the real estate consulting firm, recently announced the findings of its report ‘India’s Global Capability Centres-charting a new technology era’. The report elaborated on the growth of GCCs in India, leasing preferences, and key drivers for expansion.
Global Capability Centres are captive centres established by multinational corporations to handle a variety of functions, including analytics, technology support, product development and innovation.
As per the report, cementing the long-term intent of global corporations in India, GCCs are now leasing larger offices with the potential to scale up in the future. North American firms continue to be the mainstay of GCCs in India. Availability and cost of talent, real estate, and supporting regulatory framework aid GCCs expansion in India, the report added.
Key findings of the report;
By 2025, it is estimated that there will be ~1900 total operational GCCs in the country from existing ~1580. During this period, GCC leasing activity is expected to account for 35-40% of the overall office leasing.
Globally, among the top emerging GCC hubs, including Brazil, Chile, China, Czech Republic, Hungary, Philippines, and Poland, India has the best cost and talent attractiveness score, which makes the country the most sought-after destination for GCCs.
Top six Indian cities
The report also states that from 2023-25, the top six cities, including Delhi, Bengaluru, Mumbai, Chennai, Pune and Hyderabad, are likely to witness a strong pipeline of new developments in emerging micro markets, creating new hubs for activity. The upcoming developments would be geared towards quality investment-grade office supply, giving GCCs ample scope to upgrade and scale as they expand.
During Jan-Jun ’23, GCCs continued aggressive expansion and accounted for a 38% share in overall office space take-up across 6 cities. Office leasing by GCCs in Jan-Jun ’23 stood at 9.8 mn. sq. ft.
Bengaluru
Bengaluru, Chennai, and Hyderabad – cumulatively accounted for over 77% of the total GCC leasing during Jan-Jun’23. Bengaluru continues to account for the largest share in leasing over the six months (Jan’ 23-Jun’ 23), while Chennai has witnessed about one-fourth share led by ready institutional supply that entered the market in 2023.
Bengaluru
For Bengaluru, GCC leasing during Jan-Jun’23 stood at 3.8 mn. sq. ft. Between Jan- Dec’22 and Jan-Jun’23, key micro markets for GCC leasing were Outer Ring Road and Whitefield.
In Bengaluru, GCC leasing quantum between Jan- Dec ’22 and Jan-Jun’23 stood at 13 mn sq. ft., propelled by the tech sector that accounted for 46% share. Over the past few years, the GCC landscape in the city has evolved from being overtly dominated by technology and BFSI firms, to now becoming more diversified (as well as niche and specialised) with firms from sectors such as retail, aerospace and life sciences expanding their footprint in the city.
Chennai
During Jan-Jun ’23, Chennai emerged as the second preferred GCC market after Bengaluru in India with 2.4 mn. sq. ft. space take- up. Between Jan- Dec’22 and Jan-Jun’23, key micro markets for GCC leasing in Chennai were OMR Zone I and PT Road. GCC leasing quantum in the city, between Jan-Dec ’22 and Jan-Jun’23 stood at 4 mn sq. ft. with a 39% share dominated by the E&M sector.
The city has witnessed about a twofold increase in GCC leasing in the Jan-Jun’23 period as compared to Jan-Jun’22.
Chennai is also an education hub, with a high presence of colleges and universities offering science, technology, engineering, and mathematics (STEM) courses, a key driver for attracting new GCC entrants into the city. The Tamil Nadu R&D Policy 2022, wherein entities such as GCCs and R&D centres are eligible for a range of incentives on electricity and stamp duty costs, is likely to augur well for global firms looking to set up their footprint in the city.
Hyderabad
Hyderabad remains in the top three cities driving space absorption by GCCs during Jan-Jun’23. Leasing by GCCs during Jan-Jun ’23 in the city stood at 1.4 mn. sq. ft. Between Jan- Dec’22 and Jan-Jun’23, key micro markets for GCC leasing were IT Corridor II and Extended IT Corridor. GCC leasing quantum between Jan-Dec ’22 and Jan-Jun’23 is 6 mn sq. ft. with a 35% share dominated by the tech sector companies.
The growth of GCCs in the city comes in the backdrop of ample talent availability and an improving standard of living, comparatively lower costs, amidst proactive government initiatives. The city has witnessed GCC activity from across sectors such as technology, life sciences and consulting services.
Pune
Furthermore, Pune is emerging as a GCC hub, with a 57% increase in space taken up in Jan-Jun ’23 compared to Jan-Jun’ 22. GCC leasing quantum between Jan-Dec ’22 and Jan-Jun’23 stood at 3 mn sq. ft. with 42% share dominated by the technology sector.
Anshuman Magazine, chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE, said, “Post the pandemic, global firms were nudged to re-evaluate their business offerings to increase digitisation levels. In a bid to ensure business agility, improve efficiency and make their businesses resilient, a higher number of MNCs explored multi-functional GCCs in India. Gradually, mid, and smaller-sized firms also started venturing into the Indian shores to enhance their offerings.
“Going forward, the country’s maturing startup industry, which has a symbiotic relationship with the GCC sector, is likely to see greater collaborations, fuelling the growth of the global centres’ innovation ecosystem,” Magazine added.
Ram Chandnani, MD, advisory & transactions services, CBRE India, said, “From a commercial real estate perspective, GCCs in India form a large occupier group and are often the first to adapt and innovate, setting a precedence for other occupier groups. Most GCCs in India continue to adopt a hybrid workstyle, they will likely continue to take up large office space to enhance collaboration and innovation – key performance enablers for most GCCs.”
“We believe that the incremental growth over the next two-three years will continue to be across the top metro cities. From a workplace perspective, the health and well-being of employees will continue to be of paramount significance for GCCs, with offices built for a multi-generational workforce,” Chandnani added.
Comments
0 comment