GCCs to Dominate India's Commercial Real Estate Market in 2024: Knight Frank Report
The commercial real estate landscape in India is set to undergo a significant transformation in 2024, driven by the growing dominance of Global Capability Centres (GCCs). According to a recent report by Knight Frank, in association with 3AI, GCCs will occupy around 35% of all commercial real estate in the country, while information technology (IT) companies will maintain a steady 16% occupancy.
The report highlights a notable increase from 2022, where GCCs held approximately 26% of the commercial real estate market share. This substantial growth underscores the expanding role of GCCs in India's economic framework. In contrast, the market share for IT companies remains consistent at 16%, mirroring the projection for 2024.
Economic Impact of GCCs
The burgeoning presence of GCCs in India's commercial real estate sector is not just about physical space. It also signifies a broader economic impact. On July 22, India's Economic Survey 2024 revealed that GCCs established by multinational companies are poised to contribute roughly 3.5% to India’s GDP by 2030. This is projected to translate into an estimated revenue of $121 billion, highlighting the critical role these centers play in the nation's economic growth.
Factors Driving GCC Growth
Several factors contribute to the rapid growth of GCCs in India. Primarily, these centers are crucial for multinational corporations looking to leverage India's skilled workforce for various functions, including IT services, research and development, and business process management. The cost advantages and availability of a large talent pool make India an attractive destination for these centers.
Employment and Revenue Generation
The Economic Survey emphasizes the dual benefits of GCCs in terms of export revenue and employability potential. The robust growth trajectory of these centers is expected to generate significant employment opportunities, thereby contributing to the overall economic development. By 2030, the contribution of GCCs to India's GDP is anticipated to reach 3.5%, reflecting their increasing importance in the national economy.
Consistent Role of IT Companies
While GCCs are on a growth spree, the role of IT companies in India's commercial real estate market remains crucial yet steady. Holding a consistent 16% share, IT companies continue to be major players in the sector. This steady presence underscores the sustained demand for commercial real estate driven by the IT sector, which remains a backbone of India's economic infrastructure.
Real Estate Market Dynamics
The increasing share of GCCs indicates a shift towards more diversified occupancy, with various sectors contributing to the demand for commercial space. This diversification is essential for a balanced and resilient real estate market. For real estate developers and investors, the rising prominence of GCCs presents both opportunities and challenges. On one hand, the demand for high-quality commercial spaces is likely to increase, necessitating investments in infrastructure and amenities that cater to the needs of these centers. On the other hand, developers must navigate the competitive landscape and align their offerings with the evolving requirements of GCCs and IT companies.
Conclusion
The transformation of India's commercial real estate landscape, as projected by the Knight Frank report, signals a robust growth trajectory fueled by the expanding role of GCCs. This shift not only highlights the economic potential of these centers but also underscores the strategic importance of real estate in accommodating and supporting this growth. As India continues to attract global investments, the commercial real estate sector will play a pivotal role in shaping the country's economic future.
