India Office Real Estate Set for Robust Growth Driven by Tech and Services Expansion

The demand for office space in India is expected to surge to 1.7 billion square feet by 2030, driven by the growth of Global Capability Centers (GCCs), the increasing popularity of flexible and co-working spaces, and the expansion of the IT sector, according to a report by the Confederation of Indian Industry (CII) and Knight Frank.

Growth in Global Capability Centers

The report highlights a significant increase in GCCs from 1,700 currently to an estimated 2,400 by 2030 as India cements its position as a global hub for technology and services. This number could further rise to 2,880 by 2034, which would substantially increase the demand for office buildings across the country.

Strengthening Commercial Real Estate Market

India's commercial real estate market has been bolstered by rising global occupier interest and the emergence of small and medium-scale real estate developers. The sector has been supported by government initiatives such as the development of Special Economic Zones (SEZs), Software Technology Parks (STPs), and Export-Oriented Units (EOUs).

Resilience Amid Global Trends

Despite the global stress on commercial real estate due to the ongoing preference for remote work, India's market continues to perform well. In 2023, the top eight cities in India recorded office transactions totaling 60 million square feet. Furthermore, since 2008, office stock in these cities has grown from 278 million sq ft to over 900 million sq ft.

Expansion Beyond Major Cities

Neel Raheja, chairman of CII National Committee on Real Estate & Housing, indicated that the real estate industry is set to experience significant growth opportunities due to economic expansion and evolving consumption patterns. Notably, Tier 2 and 3 cities have seen a rapid increase in office space demand and supply, driven by factors such as business expansion, low operational costs, infrastructure developments, and the burgeoning IT and services industries.

Financial Projections and Market Value

The value of the Indian real estate sector is predicted to hit approximately $1.5 trillion by 2034, making up 10.5% of the country's total economic output. In contrast, in 2023, the sector was valued at about $482 billion, contributing 7.3% to the economic output. The residential market is projected to lead with a value of $906 billion, followed by the office sector at $125 billion. Additionally, land for manufacturing is expected to generate $28 billion, and warehousing is likely to bring in revenues of $8.9 billion.

Conclusion:

The expansion of GCCs and the rise of co-working spaces are reshaping India's office real estate landscape, promising significant growth and investment opportunities. As the sector evolves, its impact on India's overall economic fabric will likely become more pronounced, highlighting the critical role of real estate in the country's growth trajectory.