Surge in Real Estate Demand for BFSI Sector in India
A total of 53.4 million sq ft of office spaces were leased in the top seven cities of India, with the BFSI sector taking the second-largest share.
Real EstateBfsi SectorOffice SpacesIndiaLeasingReal Estate PuneNov 04, 2024
The BFSI sector has seen a steady increase in its share of overall gross office leasing. From an average of approximately 11 percent in the 2017-2019 period, the sector's share has grown to 17-18 percent over the last few years. As of the third quarter of 2024, the BFSI sector accounted for 16.4 percent of the 53.4 million sq ft 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. These international entities have consistently accounted for two-thirds of all office spaces leased by the sector over the past six years.
Mumbai, often referred to as the 'financial capital of India,' leads the pack, with approximately 44 percent of the total space occupied by domestic financial organizations. Bengaluru, known for its vibrant tech ecosystem, is the preferred hub for foreign organizations, with a 30 percent share. Together, Mumbai, Bengaluru, and Hyderabad account for over 50 percent of the total space leased by the BFSI sector in the country. Delhi NCR also has a significant presence, with an 18 percent share of domestic and 17 percent share of international BFSI companies' leasing space.
Rahul Arora, Head - Office Leasing & Retail Services, Senior Managing Director (Karnataka, Kerala), JLL, commented, “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 growth is reflected in the increasing presence of global capability centres (GCCs) across India, with the BFSI industry already accounting 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, added, “The BFSI sector is spearheading India's economic growth, driving innovation and digital transformation. We anticipate continued robust demand for office spaces that can support innovation, attract top talent, and meet evolving consumer demands. The overall BFSI segment leased over 11 million sq ft in 2023, the highest ever, and is on track to surpass that number in 2024. 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 about 65 percent of the total demand. 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.”
The rapid expansion of the BFSI sector is complemented by technological advancements, available talent pools, and evolving infrastructure across cities. The ongoing digital revolution, facilitated by government initiatives like UPI and the adoption of emerging technologies such as AI, blockchain, and cloud computing, will accelerate the sector's evolution, necessitating adaptable and future-ready workspaces. The increasing demand for professional talent, particularly in areas such as data science and cybersecurity, will influence office location and design choices within the sector. The growing focus on sustainability and ESG goals will further enhance the rising needs in the real estate market.
Frequently Asked Questions
Which sector is the second-largest occupier of office spaces in India?
The BFSI sector is the second-largest occupier of office spaces in India, following the IT/ITeS sector.
What is the projected growth of India's fintech market by 2025?
India's fintech market is projected to reach approximately $1.5 trillion by 2025.
Which city accounts for the highest percentage of office space occupied by domestic financial organizations?
Mumbai accounts for approximately 44 percent of the total space occupied by domestic financial organizations.
What percentage of the BFSI sector's activity in India is dominated by global players?
Global players dominate over 65 percent of the BFSI sector’s activity in India.
Which cities together account for over 50 percent of the total space leased by the BFSI sector in India?
Mumbai, Bengaluru, and Hyderabad together account for over 50 percent of the total space leased by the BFSI sector in India.
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