GCCs in India: 45-50mn sq ft Office Space Demand by 2025 - Colliers

New Delhi, Feb 21 (PTI) Foreign companies are looking to set up capability centres in India in view of lower real estate costs and availability of skilled people, and they may take on lease 45-50 million square feet of office space during 2024-25 to create such facilities across major cities, according to Colliers.

Real estate consultant Colliers India on Wednesday released a report 'Global Capability Centers (GCCs) in India -A newfound wave of confidence', which stated that GCCs could lease 45-50 million square feet of Grade A office space by 2025 as against 39.5 million square feet across six major cities during 2022-23 calendar year.

"GCCs have always played a significant role in the demand of Grade A office spaces in the country. Initially starting as a support provider, GCCs in India have continuously scaled up their offerings," the report said.

The consultant pointed out that GCCs adopted a wait and watch policy for their India expansion plans due to "back-to-back global black swan events in the form of Covid-19 pandemic and cross-border tensions".

"However, as India continues to reassure global investors with its inherent strengths, GCCs seem to have regained their comfort levels about the India growth story," it added.

Colliers report noted that improved business sentiments and India's positive economic outlook are fostering heightened demand of office spaces.

"It also reflects confidence amongst foreign companies who are looking to set up their capability centres in India."

In the next two years, Colliers anticipates around 45-50 million square feet (sq ft) of GCC leasing activity, contributing to about 40 per cent of the total demand for office spaces in India.

Although the bulk of the real estate demand will come from the top six cities of the country, the consultant said that Tier II cities might also witness heightened GCC activity in these locations.

With increased digitisation, GCCs are increasingly leasing office spaces equipped with advanced technological infrastructure to support their operations, including high-speed internet, cybersecurity measures, and state-of-the-art communication tools.

Since 2020, the consultant said that GCCs have leased about 72 million sq ft of office space across the top 6 cities in India, accounting for 39 per cent of the total office demand during the period.

US-origin GCCs, primarily belonging to Tech and BFSI sectors, dominated this demand with 71 per cent share, followed by EU-based GCCs.

While US and Europe-based MNCs have been establishing their capability centres for a long time, Colliers highlighted that global players from APAC region, especially Japan and South Korea, have begun investing in setting up their R&D/ innovation centers in India over the past few years.

"India's advantageous position stands out both in terms of cost and skilled talent. Although other countries with GCC presence have been emerging of late, India firmly remains a GCC favourite in a highly competitive global environment," the report said.

Amal Mishra, Co-founder, UrbanVault, a Bengaluru-based managed co-working space provider, said the demand for Grade A office space has surged significantly in the past 2-3 years, particularly driven by the establishment of GCC by numerous multinational companies in cities such as Bengaluru, Hyderabad and Gurugram.

"These cities have become prime destinations for global firms seeking to expand their operations in India. Interestingly, many of these multinational corporations are showing a preference for managed coworking spaces customised to their specific requirements and preferences, as opposed to traditional office setup," Mishra said.