Over the next two years, Global Capability Centers (GCCs) are expected to lease about 45-50 million square feet of office space, accounting for approximately 40% of the total office demand across the top 6 cities. Improved business sentiments and positive economic outlook is fostering heightened demand of office spaces in India, particularly signaling confidence among foreign origin companies seeking to establish their capability centers in the country. Interestingly, despite a weaker global outlook amidst pandemic and geopolitical tensions in the last 2-3 years, GCCs resumed their expansions in a steadfast manner, registering a 14% YoY rise in leasing activity in 2023. The second half of 2023 particularly witnessed the highest GCC leasing activity since 2020, reaching 12.4 million square feet, according to Colliers’ latest report, titled “Global Capability Centers in India: A newfound wave of confidence”.
The report highlights the pivotal role GCCs will continue to play in shaping India’s commercial real estate landscape in near future. Driven by cost-effective offerings and a talent-rich environment, foreign companies will continue their expansions in India, further bolstering GCC demand in near to mid-term.
“With heightened GCC activity and sustained domestic demand, the outlook for India’s office market is indeed optimistic. Drawing confidence from India’s economic resilience, GCCs have swiftly resumed leasing activities, and are poised to play a pivotal role, contributing to over 40% of the total office demand in the next 1-2 years. As Technology and BFSI sectors maintain their dominance, growing interest of occupiers from Engineering & manufacturing and Healthcare sectors promise to diversify the GCC landscape further. Moreover, GCCs are steadily adopting flex spaces, with approximately 5-10% of flex seats currently being utilized by GCC occupiers, indicating a shift towards more agile workspace solutions.” says Arpit Mehrotra, Managing Director, Office Services, Colliers India.
GCC leasing trend in India:
| Year-period | GCC leasing in msf | GCC leasing share in total office leasing (%) |
| H1 2020 | 6.6 | 51% |
| H2 2020 | 10.7 | 62% |
| H1 2021 | 4.7 | 45% |
| H2 2021 | 10.3 | 45% |
| H1 2022 | 10.6 | 40% |
| H2 2022 | 7.8 | 33% |
| H1 2023 | 8.7 | 35% |
| H2 2023 | 12.4 | 37% |
Source: Colliers
Note- Gross absorption: does not include lease renewals, pre-commitments and deals where only a letter of Intent has been signed.
Data pertains to Grade A buildings only
Top 6 cities include Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai, and Pune
US origin firms account for 71% of the total GCC demand
Since 2020, GCCs have leased about 72 million sq ft of office space across the top 6 cities in India, accounting for 39% of the total office demand during the period. US-origin GCCs, primarily belonging to Tech and BFSI sectors, dominated this demand with 71% share, followed by EU based GCCs. APAC based Tech and Engineering & manufacturing firms too have gradually started establishing their GCCs in the country, registering notable 8X YoY rise in 2023. The continued interest from the US, EU and other regions solidifies India’s position as a preferred GCC destination, driven by availability of skilled workforce at affordable costs, real estate cost arbitrage and improving regulatory framework.
GCC demand diversifies with surge in BFSI and Engineering & manufacturing leasing activity
While Technology sector continued to dominate the overall GCC leasing activity during 2020-23 period, BFSI and Engineering & manufacturing firms saw significant traction in recent years. In 2023, the BFSI sector experienced a four-fold increase in GCC leasing activity, while the Engineering & manufacturing sector saw a notable 1.6X rise compared to 2020. This trend underscores a broader trend of sectoral diversification in the country’s office market, which is likely to shape office space demand in near- medium term.
Sector wise share in GCC leasing during 2020-2023:
| Sector | GCC leasing share (%) |
| Technology | 45% |
| BFSI | 18% |
| Engineering & Manufacturing | 17% |
| Consulting | 6% |
| Healthcare & Pharma | 5% |
| E-commerce | 4% |
| Others* | 5% |
Source: Colliers
Notes: Data pertains to grade A buildings only
Data as of Q4 2023
Others include logistics, consumables etc.
Bengaluru and Hyderabad together account for 60% of the total GCC demand
Southern cities like Bengaluru, Hyderabad, and Chennai have become key GCC hubs, with Bengaluru and Hyderabad together leading GCC leasing activity at a cumulative share of 60% from 2020 to 2023. Chennai saw a notable 2.4X surge in 2023, while Pune and Mumbai witnessed over 1.7X growth compared to 2022.
City-wise GCC leasing and % share during (2020-2023) –
| City | GCC leasing 2020-23 (in msf) | % share in total GCC leasing |
| Bengaluru | 26.4 | 37% |
| Chennai | 11.0 | 15% |
| Delhi NCR | 7.9 | 11% |
| Hyderabad | 17.1 | 24% |
| Mumbai | 3.1 | 4% |
| Pune | 6.5 | 9% |
| Total | 72.0 |
Source: Colliers
Note: Data pertains to Grade A buildings only
The attractiveness of Tier I Indian cities lies in the availability of high-quality commercial developments, strong talent pool and robust educational ecosystem making them ideal locations for expansionary activities of GCCs. Furthermore, comparatively low real estate and manpower cost as well as overall cost of living makes India a strong competitor in the GCC landscape.“Sub and near dollar micro markets remain pivotal for GCC space uptake in India, contributing nearly 80% of the leasing activity. With two-thirds of the demand concentrated in quality assets across SBDs of respective cities, GCC occupiers tend to give equal consideration to rental affordability and high-quality infrastructure. Occupiers particularly from sectors like engineering & manufacturing and healthcare & pharma typically favour PBDs owing to their significant lower rentals. Looking ahead, SBDs will remain GCC epicenters for their proximity to talent pools and business hubs, while PBDs will witness increased interest, especially from non-tech sectors. Improved business sentiments and positive economic outlook is likely to drive heightened demand for office spaces including GCCs in the country,” says Vimal Nadar, Senior Director and Head of Research, Colliers India.
About Colliers
Colliers (NASDAQ, TSX: CIGI) is a leading diversified professional services and investment management company. With operations in 66 countries, their 19,000 enterprising professionals work collaboratively to provide expert real estate and investment advice to clients. For more than 28 years, their experienced leadership with significant inside ownership has delivered compound annual investment returns of approximately 20% for shareholders. With annual revenues of $4.3 billion and $98 billion of assets under management, the company maximizes the potential of property and real assets to accelerate the success of their clients, investors and people.
