South India office market on the fast lane driven by the IT sector, GCCs

South India’s office market is experiencing exponential growth, driven by increased interest from multinationals (MNCs), particularly global capability centres (GCCs) and the information technology (IT) sector. According to real estate management firm JLL, the combined share of southern cities Bengaluru, Hyderabad, and Chennai in India's annual net absorption has remained between 54% and 56% in 2022 and 2023, with a slight increase expected over the next 2 years. The tech sector in these cities is robust, with GCCs significantly driving office leasing activities, especially in Bengaluru and Hyderabad. “These 3 cities combined have a share of more than 66% in the active request for proposals (RFPs) of 29-30 million square feet at the all-India level. Office demand in the 3 prime south Indian markets has been robust,” said chief economist and head of research & Real Estate Intelligence Service (REIS), India, JLL Mr. Samantak Das. In terms of new supply, these 3 cities cumulatively accounted for about 65% of new Grade A supply in 2023, according to Cushman & Wakefield. In Kerala, Kochi and Thiruvananthapuram have emerged as 2 of the fastest-growing cities in India’s Tier II league.

“New GCCs set up in India, both greenfield and expansions by existing MNC occupiers, reached a record high in 2023. The 3 south Indian cities cumulatively accounted for about 74% of space leased for new GCC centres, led by Bengaluru and Hyderabad. In the first quarter of 2024, the share of South India jumped to 84% in pan-India GCC space leasing volumes. South Indian tech cities remain the key drivers of GCC activity in India. They will remain so in the medium term. India is expected to witness the entry of over 100 new GCC companies in 2024 and 2025. South India is likely to remain the destination of choice for many of them,” said Managing Director, Tenant Representation, India, Cushman & Wakefield Mr. Veera Babu.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.