BFSI Sector Drives Surge in Real Estate Demand in India
The Banking, Financial Services, and Insurance (BFSI) sector has seen a surge in demand for office spaces, emerging as the second-largest occupier in India, following the IT/ITeS sector. According to JLL India, this growth is driven by technological advan
Bfsi SectorReal Estate DemandOffice SpacesJll IndiaFinancial ServicesReal Estate MumbaiNov 04, 2024
The BFSI sector has been consistently growing its share in India's overall gross office leasing. The sector's share in office leasing has increased from an average of approximately 11 percent in the 2017-2019 period to 17-18 percent over the last few years. Until the third quarter of 2024, office leasing in the BFSI sector accounted for 16.4 percent of the 53.4 million square feet of total gross leasing across the country's top seven cities Mumbai, Delhi NCR, Kolkata, Bengaluru, Chennai, Hyderabad, and Pune.
Global players have been at the forefront of this expansion, dominating over 65 percent of the BFSI sector’s activity in India. On average, these international entities have accounted for two-thirds of all office space leased by the sector over the past six years. Mumbai, known as the 'financial capital of India,' leads the pack, accounting for approximately 44 percent of the total space occupied by domestic financial organizations. Bengaluru, with its unparalleled tech ecosystem, is seen as the preferred hub for foreign organizations, with a 30 percent share, reflecting its ability to attract top talent and financial services organizations from across the globe. Mumbai, Bengaluru, and Hyderabad together account for over 50 percent of the total space leased by the BFSI sector in the country, while Delhi NCR also makes its presence felt with an 18 percent share of domestic and 17 percent share of international BFSI companies' leasing space.
According to Rahul Arora, Head - Office Leasing & Retail Services, Senior Managing Director (Karnataka, Kerala), India, JLL, 'India's BFSI sector is experiencing remarkable growth, with significant opportunities for the office real estate market. The country's fintech market, currently valued at $584 billion, is projected to reach approximately $1.5 trillion by 2025. This expansion is reflected in the increasing presence of global capability centres (GCCs) across India. The BFSI industry already accounts for a substantial 20 percent share of these GCCs. With over 1,900 GCCs offering end-to-end services, India is poised for further growth in this sector, driving continued demand for office spaces.'
Dr. Samantak Das, Chief Economist and Head – Research and REIS, India, JLL, adds, 'The BFSI sector is spearheading India's economic growth, driving innovation and digital transformation. As the sector evolves, we anticipate continued robust demand for office spaces that can support innovation, attract top talent, and meet evolving consumer demand. The overall BFSI segment leased over 11 million square feet in 2023, the highest ever, and is on track to surpass that number in 2024. We are already seeing that the tech cities of Bengaluru, Hyderabad, Chennai, and Pune account for over 80 percent of all BFSI GCCs’ demand, while domestic BFSI demand is driven by Mumbai and Delhi NCR, which together account for a 65 percent share. The sector's dynamic needs present significant opportunities for the real estate industry to create sophisticated, technology-enabled workspaces that cater to the unique requirements of financial institutions.'
This rapid expansion, complemented by technological advancements, available talent pool, and evolving infrastructure across cities, indicates a very positive future outlook for the BFSI sector in India. The ongoing digital revolution, facilitated by government initiatives like UPI and the adoption of emerging technologies like AI, blockchain, and cloud computing, will accelerate the sector's evolution, necessitating adaptable and future-ready workspaces. This will be further strengthened by the increasing demand for professional talent. JLL anticipates that the need for specialized skills in areas such as data science, cybersecurity, etc., will influence office location and design choices within the sector. The growing focus on sustainability and ESG goals will only enhance the rising needs.
Frequently Asked Questions
What is driving the surge in demand for office spaces in the BFSI sector?
The surge in demand for office spaces in the BFSI sector is driven by rapid technological advancements, a vast talent pool, and evolving market dynamics. These factors are contributing to the sector's robust growth and increasing share in India's overall gross office leasing.
Which cities are the top hubs for BFSI office space leasing in India?
The top hubs for BFSI office space leasing in India are Mumbai, Bengaluru, and Hyderabad. These cities account for over 50 percent of the total space leased by the BFSI sector in the country, with Delhi NCR also making a significant presence.
What role do global players play in the BFSI sector's office space leasing in India?
Global players dominate over 65 percent of the BFSI sector’s activity in India, accounting for two-thirds of all office space leased by the sector over the past six years. These international entities are at the forefront of the sector's expansion in India.
How is the fintech market contributing to the BFSI sector's growth?
The fintech market, currently valued at $584 billion, is projected to reach approximately $1.5 trillion by 2025. This significant growth is reflected in the increasing presence of global capability centres (GCCs) across India, accounting for a substantial 20 percent share of these GCCs, which is driving continued demand for office spaces.
What are the key factors influencing office location and design choices in the BFSI sector?
The key factors influencing office location and design choices in the BFSI sector include the need for specialized skills in areas such as data science and cybersecurity, the growing focus on sustainability and ESG goals, and the requirement for technology-enabled workspaces that can support innovation and attract top talent.
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