Global Competency Centres (GCC) have edged out IT-ITES services companies and grabbed a large share of the office space in the country. The share of GCC in the total area transacted grew from 25% in 2022 to 35% in 2023, a Knight Frank India Real Estate: Residential and Office (July-Dec ’23) report said. Office space transactions were within striking distance of an all-time high of 60 million sq ft. Total office absorption in the top eight cities in 2023 was 59.6 million sq ft, with a 15% jump in transactions, making it the best-performing office market in the world.
Hyderabad, Chennai and Pune were the top three destinations for the GCCs and accounted for more than half of the office space in these cities. The share of GCCs in office transactions increased to 20.8 million sq ft in 2023, compared to 13.2 million sq ft in 2022.
Shishir Baijal, chairman and managing director, Knight Frank India, said there was a significant shift in the office space segment in the country, with GCCs taking precedence over third-party IT services companies. GCCs were filling the gap left by the traditional third-party IT services companies, Baijal said. Global Capability Centres recorded an increase of 58% in transaction volumes in 2023.
Viral Desai, senior executive director (logistics, capital markets and retail) said there was a change in the leader board, with GCCs either expanding their facilities or new GCCs. IT service firms were traditionally the flag bearers of the commercial office space in the country for the last 30 years, but their share was reducing and came down to 11% from 16% last year. The change was due to multiple reasons, ranging from work from home, subdued prospects because of global economic uncertainties, more in-sourcing of work, and the emergence of technologies such as AI. Some of these companies were looking for buyers for their office space, he said.
With greater visibility of business and uncertainty reducing, companies are now looking for long-term investments and moving to their facilities leading. There was a 200 basis point reduction in the share of co-working companies during the year. Global corporations were leaning towards owning their resources and were inclined to establish centres in India because of talent pools, quality real estate, competitive rental rates and a growing economy.
Overall, Bengaluru remained the largest office market by volume leasing over 12 million sq ft, followed by Chennai (10.8 million sq ft) and National Capital Region (10.1 million sq ft).
In the residential segment too, sales in the country were the highest in the last 10 years with 3,29,000 homes sold in 2023, the Knight Frank India report said. Residential launches grew 7% year-on-year to 3,50,746 unit in 2023. The highest annual sales growth was seen in the premium (more than Rs 1 crore) category with a 33% year-on-year growth in 2023.