India's Commercial Real Estate Sector: Defying Global Trends
India's commercial real estate market has demonstrated remarkable resilience and growth, attracting $5.4 billion in investments, despite global economic challenges.
Commercial Real EstateGccIndiaInvestmentTier 2 TownsReal EstateJul 19, 2024
The demand from Global Capability Centers (GCCs) has become a pivotal driver of growth within India's office sector. As global companies seek efficient outsourcing solutions amid economic pressures, India's GCCs are rapidly expanding. Projected to grow at a compound annual growth rate (CAGR) of 10%, the GCC industry is expected to reach $715 billion by 2027, up from the current $465 – 510 billion. India holds a 30% share of the global GCC market and employs up to 2 million professionals.
Today, only 40-45% of Fortune 500 companies have GCCs, providing significant scope for penetration. Given India's demographic advantage, with an estimated 80-90 million people to be added to the working-age population by 2027, the demand for Grade A commercial real estate is expected to increase. In fact, estimates suggest that India will have 3.5-4 million workforce employed in GCCs over the next 3-4 years, implying a doubling of the Grade A space required.
Another significant trend is the rising contribution of domestic investors and capital flowing into this space, with a sharp decline in foreign fund activity in India given global interest rate situations and geopolitical uncertainties. Despite these challenges, the Indian real estate sector remains robust, driven by increasing share of a new class of investors ultra-high-net-worth individuals and family offices. These investors are drawn to the tangible security of asset-backed investments and the regulated environment of Alternative Investment Funds (AIFs), significantly impacting the real estate market with approximately Rs. 3 trillion already invested.
Looking forward, there is a huge opportunity for Tier 2 towns to emerge as new centers of growth and commercial real estate investment. While we've made good progress in transportation infrastructure, there is an urgent need to upgrade the urban infrastructure in these cities to increase livability and attract both businesses and employees. A shift is underway, with pioneering firms redirecting their focus to Tier 2 cities, which have seen a twofold increase in investment flow, primarily for the acquisition of undeveloped land parcels.
Information
Boston Consulting Group (BCG) is a global management consulting firm that partners with clients from the private, public, and not-for-profit sectors to identify and solve their most pressing challenges.
Rishabh Goel is the Managing Director and Partner at BCG, and Yashi Tandon is the Lead Knowledge Analyst, Team Lead, at BCG.
Frequently Asked Questions
What is the current size of the GCC industry in India?
The current size of the GCC industry in India is $465-510 billion, expected to reach $715 billion by 2027.
What is the share of India in the global GCC market?
India holds a 30% share of the global GCC market.
What is the estimated number of workforce employed in GCCs in India by 2027?
Estimates suggest that India will have 3.5-4 million workforce employed in GCCs over the next 3-4 years.
What is the current investment in the Indian real estate market by ultra-high-net-worth individuals and family offices?
The current investment in the Indian real estate market by ultra-high-net-worth individuals and family offices is approximately Rs. 3 trillion.
What is the trend in investment flow in Tier 2 cities in India?
Tier 2 cities in India have seen a twofold increase in investment flow, primarily for the acquisition of undeveloped land parcels.
Related News Articles
MHADA Lottery Pune 2024: Lucky Draw Scheduled for June 26
Get ready for the MHADA Pune lottery 2024 lucky draw on June 26, 2024. The MHADA Pune board will give away 4,777 units in Pune and Pimpri Chinchwad.
Helicopter Crash in Pune District: 4 Injured in Private Aviation Accident
A private helicopter flying from Mumbai to Hyderabad crashed in Pune district, injuring four passengers. The incident occurred near Paud village on August 24.
Budget 2025: Real Estate Sector Awaits Tax Incentives for Affordable Housing
The real estate industry is eager for the upcoming Budget 2025, with a focus on tax incentives and reforms to boost affordable housing. Key demands include reducing GST rates, increasing tax deductions, and simplifying land acquisition processes.
Exciting Deals for Women Homebuyers at Mumbai's 32nd Property Exhibition
The Confederation of Real Estate Developers' Associations of India-Maharashtra Chamber of Housing Industry (CREDAI-MCHI) is set to host its 32nd Property Exhibition, offering exclusive deals for women homebuyers. This event is a great opportunity for wome
Odisha Court Mandates Rs 450 Crore Disbursement to Investors of Rose Valley Scam
The High Court of Odisha has directed the disbursement of Rs 450 crore to the investors affected by the Rose Valley group scam. This landmark decision is a significant step towards justice for thousands of aggrieved investors who have been waiting for yea
Blackstone Expands in India's Housing Market with Strategic Investments
Blackstone, a leading global investment firm, is making significant strides in India's housing market by focusing on key cities such as Pune, Mumbai, and Bengaluru. This move is part of the firm's broader strategy to strengthen its presence in the Indian