In recent years, India has emerged as a prime destination for Global Capability Centers (GCCs), significantly influencing the commercial real estate landscape. A report by Knight Frank India reveals that GCCs leased a staggering 22.5 million square feet of office space, illustrating their growing footprint in the market. With Bengaluru leading the charge, capturing 42 percent of the total leasing volume, the dynamics of office space transactions reflect both the evolving preferences of multinational corporations and the strategic initiatives introduced by the Indian government. This introduction sets the stage to explore how GCCs are reshaping the business landscape in India and the factors that contribute to their success.
| Category | Details |
|---|---|
| Total GCC Office Space Leased (2024) | 22.5 million sq ft |
| Percentage of Total Leasing Volume | 31% |
| Large Deals (over 100,000 sq ft) | 50 deals, 12.1 million sq ft |
| Mid-sized Deals (50,000 to 100,000 sq ft) | 56 deals, 4.4 million sq ft |
| Small Deals (under 50,000 sq ft) | 223 deals, 5.5 million sq ft |
| Leading City for GCC Leasing | Bengaluru (42% of total volume) |
| Total Transactions in Top 8 Cities | 329 deals |
| Bengaluru Transactions | 100 deals (highest) |
| Chennai Transactions | 89 deals (2nd highest) |
| Sub-50,000 sq ft Deals – Bengaluru | 66 deals |
| Sub-50,000 sq ft Deals – Chennai | 73 deals (highest) |
| Mid-sized Deals – Hyderabad | 15 deals (highest) |
| Large Deals – Bengaluru | 20 deals (highest) |
| Total GCC Leasing in Bengaluru | 9.33 million sq ft (66% large deals) |
| Total GCC Leasing in Hyderabad | 5.06 million sq ft (67% large deals) |
| Chennai GCC Transactions (2023) | 6 million sq ft (highest due to Bank of America) |
| YoY Change in Chennai GCC Take-up (2024) | 48% decline |
| Breakdown of GCC Transactions in Chennai | Large: 1.07 million sq ft, Mid-sized: 600,000 sq ft, Small: 1.48 million sq ft |
| Future of GCCs in India | Supported by government policies and skilled workforce |
Understanding Global Capability Centers (GCCs)
Global Capability Centers, or GCCs, are specialized offices where multinational companies manage a wide range of operations like IT, finance, and customer support. According to Knight Frank India, GCCs leased a staggering 22.5 million square feet of office space in 2023, making up a huge 31 percent of all leased offices. This shows just how important GCCs are in today’s business world, helping companies operate efficiently from different locations.
The growth of GCCs in India is remarkable, especially in cities like Bengaluru, Chennai, and Hyderabad. These centers are not just about office space; they create job opportunities and boost the local economy. With 329 leasing deals across the top cities, GCCs are becoming a key player in the Indian commercial real estate market, making it a hot spot for companies looking to expand their operations.
Bengaluru: The Leading Hub for GCCs
Bengaluru has emerged as the top city for Global Capability Centers, capturing an impressive 42 percent of the total GCC leasing volume. With 100 lease transactions, it stands out as the preferred destination for large office spaces. The city’s vibrant tech scene and skilled workforce make it an attractive choice for companies looking to set up their GCCs.
In the large office category, Bengaluru recorded 20 deals, showcasing its dominance in the market. This growth reflects the city’s ability to offer high-quality office spaces and a supportive business environment. As more companies recognize Bengaluru’s potential, the city is likely to continue attracting more GCC investments in the future.
Chennai’s Remarkable GCC Growth
Chennai has also seen significant growth in Global Capability Centers, particularly due to a notable transaction by Bank of America. This deal helped Chennai reach 6 million square feet in GCC transactions in 2023, making it a key player in this sector. However, the following year saw a 48 percent decline in GCC take-up, mainly due to the previous year’s large base.
Despite the decline, Chennai continues to attract various GCC transactions across different office sizes. Large office spaces accounted for 1.07 million square feet, while smaller offices contributed significantly as well. This diverse mix of office spaces shows Chennai’s adaptability and ongoing appeal to businesses looking to establish their GCCs.
The Role of Government Initiatives
The Government of India plays a crucial role in promoting the growth of Global Capability Centers. With proactive policies designed to attract businesses, the government aims to create a supportive framework for GCCs. This includes initiatives to enhance infrastructure and streamline processes for companies looking to set up their operations.
Such government support not only encourages corporate interest but also boosts India’s recognition as a prime destination for GCCs. By focusing on creating a conducive environment, the government is helping to ensure that India remains competitive in the global market, making it an ideal place for businesses seeking to expand their operations.
Real Estate and Cost-Effectiveness in India
One of the significant advantages of setting up a Global Capability Center in India is the cost-effective real estate options available. India offers a vast supply of Grade A office spaces, which are comparable to those found in leading global cities. This makes it an attractive option for businesses looking to minimize operational costs while maintaining high standards.
Furthermore, commercial rents in India have remained stable in USD terms for over a decade. This stability not only makes it easier for companies to budget but also enhances India’s status as a competitive choice for GCC expansion. The combination of quality office spaces and reasonable costs continues to draw businesses to India.
The Future of GCCs in India
Looking ahead, the future of Global Capability Centers in India appears bright. With a skilled talent pool and favorable government policies, GCCs are expected to thrive in the coming years. These factors contribute to a robust ecosystem that supports business growth and innovation.
As companies increasingly recognize India’s potential as a GCC destination, we can expect further expansion in this sector. The proactive approach of the government, combined with the country’s rich resources and real estate options, positions India as a leading choice for businesses aiming to establish their Global Capability Centers.
Frequently Asked Questions
What are Global Capability Centers (GCCs)?
Global Capability Centers (GCCs) are specialized units set up by companies to perform various business functions, leveraging skilled talent and cost-effective real estate in different countries.
How much office space did GCCs lease in 2024?
In 2024, GCCs leased 22.5 million square feet of office space, making up 31 percent of the total leasing volume in the market.
Which city had the most GCC leasing transactions?
Bengaluru led with 100 leasing transactions, representing 42 percent of the total GCC leasing volume across the top eight cities in India.
What factors make India attractive for GCCs?
India is appealing for GCCs due to its skilled workforce, stable commercial rents, and government policies supporting growth, making it a competitive choice for businesses.
What was the impact of Bank of America’s transaction in Chennai?
Bank of America’s significant transaction propelled Chennai to the top of the GCC leaderboard, leading to 6 million sq ft transacted in 2023.
How did GCC transactions change from 2023 to 2024 in Chennai?
Chennai saw a 48 percent year-on-year decline in GCC take-up in 2024, largely due to the massive transaction in 2023 that set a high benchmark.
What is the future outlook for GCCs in India?
With supportive government initiatives and a robust real estate market, GCCs in India are likely to continue growing, enhancing the country’s stature as a preferred destination.
Summary
In 2024, Global Capability Centers (GCCs) in India leased 22.5 million square feet of office space, making up 31% of total leasing. Bengaluru was the top city with 100 transactions, followed by Chennai with 89 deals. Large office spaces (over 100,000 sq ft) accounted for the majority of leases, especially in Bengaluru. The government is promoting GCC growth through supportive policies, enhancing India’s appeal as a GCC destination. Despite a decline in GCC transactions in 2024, the country’s skilled workforce and stable commercial rents continue to attract businesses looking to establish operations in India.
