India's Office and Workspace Real Estate Set to Gain from Recent GST Cuts
India's office and workspace market is booming, with record-breaking leasing activity driven by demand from Global Capability Centres (GCCs), IT services, and flexible workspaces, according to a published report. This growth is occurring alongside a significant increase in green-certified office spaces and the adoption of flexible work models, which are becoming integral to occupier strategies.
Bengaluru, NCR, Hyderabad, and Pune are key hubs for this expansion. The overall market is showing resilience and is poised for continued growth in the coming years, as stated by Archana Naidu, head of business at iKeva.
The recent GST Council has recommended tax cuts on key construction materials. The GST on cement has been reduced from 28 per cent to 18 per cent, and on marble, granite, travertine blocks, and materials like sand-lime bricks and stone inlay work, to 5 per cent from the existing 12 per cent. These reductions are expected to provide a positive boost to India's office and workspace sectors, Naidu said.
Cement and finishing materials account for a significant portion of construction costs, typically ranging from 10 to 30 per cent. With these GST reductions, developers and workspace operators are likely to save 3 to 5 per cent on overall project costs. This improved cost structure directly benefits office development and fit-outs—especially for co-working spaces, where infrastructure and interiors are critical.
The benefits of these cost savings are multifaceted. For developers, reduced costs can translate into more competitive pricing for their properties, making them more attractive to potential tenants. For workspace operators, the savings can be reinvested into enhancing the quality of their offerings, such as better amenities and more advanced technological infrastructure.
Moreover, the increased adoption of green-certified office spaces is a positive trend that aligns with global sustainability goals. Green buildings not only reduce environmental impact but also offer long-term cost savings through energy efficiency and reduced maintenance costs. This trend is particularly significant in a country like India, where the demand for sustainable and eco-friendly work environments is on the rise.
In conclusion, the recent GST cuts on key construction materials are expected to provide a significant boost to India's office and workspace sectors. The combination of reduced costs, increased demand from GCCs and IT services, and the growing importance of green-certified spaces is setting the stage for a robust and resilient market. As the industry continues to evolve, the focus on flexibility and sustainability will remain key drivers of growth and innovation.
