Bengaluru Leads India's GCC Leasing Market with Record Absorption in 2023

Bengaluru has solidified its position as the leading hub for Global Capability Centre (GCC) leasing in India, recording an impressive absorption of over 15.34 million square feet of office space in 2023. This significant milestone was highlighted by Rahil Gibran, National Director of Occupier Strategy and Solutions at Knight Frank India, during the GCC X Summit 2024. Bengaluru’s dominance in this sector underscores the city’s pivotal role in driving India’s real estate market, particularly in the commercial property segment.

 Bengaluru’s Pivotal Role in the IT/ITeS Sector

Bengaluru's prominence is further emphasized by its substantial 53% share of GCCs in the Information Technology and Information Technology Enabled Services (IT/ITeS) sector. This is a testament to the city’s robust infrastructure, skilled workforce, and business-friendly environment, making it a preferred destination for global companies seeking to establish or expand their operations in India. Builders and real estate developers in Bengaluru have been keenly responding to this demand by developing state-of-the-art office spaces and commercial properties to cater to the needs of these global giants.

 Mumbai’s Leadership in the BFSI Sector

While Bengaluru dominates the IT/ITeS space, Mumbai leads the pack in the Banking, Financial Services, and Insurance (BFSI) sector, with a 35% share of GCCs in this industry. The contrast between these two cities highlights the diverse opportunities within India's top real estate markets. For builders and real estate developers, this means tailoring their projects to meet the specific needs of different industries—be it the high-tech campuses in Bengaluru or the financial hubs in Mumbai.

 Growth Across India’s Top Real Estate Markets

The top eight cities driving India’s GCC leasing market include Bengaluru, Hyderabad, Chennai, Ahmedabad, Pune, Mumbai, the National Capital Region (NCR), and Kolkata. These cities represent the country’s most dynamic real estate markets, each offering unique advantages for both investors and global corporations. The increased demand for office spaces across these cities has created a thriving market for commercial real estate, with developers racing to meet the growing needs of GCCs.

 Future Projections: A Booming Market

Looking ahead, the office leasing by GCCs is expected to reach 26 million square feet by 2027, up from 19.69 million square feet in 2023. This growth trajectory is supported by a significant 16% increase in transaction activities from 2018, with GCCs completing 6,667 office leasing deals across these major cities between 2018 and 2023. This surge in demand for office spaces is a clear indicator of the robust health of India’s commercial real estate market, with Bengaluru leading the charge.

Despite the global economic slowdown, which briefly impacted Bengaluru's IT sector, GCCs have ramped up their leasing activities, maintaining strong momentum. This resilience demonstrates the underlying strength of Bengaluru’s real estate market and its capacity to weather economic challenges.

 Economic Impact and Revenue Generation

According to estimates from Ernst and Young, by the end of 2024, the total revenue generated by all GCCs operating in India is expected to reach approximately $46 billion. This significant contribution underscores the vital role that GCCs play in the Indian economy, driving demand for commercial real estate and creating opportunities for builders and developers across the country.

 Expanding the Number of GCCs

The growth in the number of GCCs in India has been remarkable. In 2019, there were approximately 1,250 GCCs in the country. By 2023, this number had increased to around 1,600. Projections suggest that, with a stable government and industry-friendly policies, the number of GCCs could reach 2,525 by 2030. Even under more conservative estimates, the number is expected to rise to 2,006 by the same year. This expansion represents a significant opportunity for real estate developers, particularly in cities like Bengaluru, where the demand for office space is expected to continue its upward trajectory.

 Transaction Trends in GCC Leasing

Between 2018 and 2023, approximately 5,349 GCC deals across the eight major cities involved office spaces under 50,000 square feet. Additionally, 790 deals were for spaces ranging from 50,000 to 1 lakh square feet, while 528 deals exceeded 1 lakh square feet—marking some of the largest transactions during this period. These figures highlight the diversity in the size of office spaces being leased, catering to the varying needs of global companies.

The Future of Bengaluru’s Real Estate Market

As Bengaluru continues to lead India’s GCC leasing market, the city’s real estate landscape is set for significant development. Builders and property developers in Bengaluru are uniquely positioned to capitalize on this growth, with increasing demand for commercial properties and office spaces. The city’s status as a key hub for global enterprises will only strengthen as more companies seek to establish their GCCs in India.

Bengaluru’s leadership in the GCC leasing market underscores the city’s critical role in India’s real estate sector. With strong demand from global companies and a robust pipeline of new projects, Bengaluru is poised to remain at the forefront of India’s commercial real estate market, offering lucrative opportunities for builders, developers, and investors alike.