BFSI (Banking, Financial Services and Insurance) sector has emerged as the most prominent demand driver in office leasing for the first time in a decade during the first nine month of this year as global BFSI majors established their Global Capability Centres (GCCs) in India.
While share of IT sector in total office space leasing has gone down from 37% in 2019 to 23% in 2023 due to slowdown in the sector, share of BFSI has increased from 11% to 23% during the same period.
According to CBRE, the upswing was primarily driven by the robust performance of BFSI companies, supported by their multi-year low non-performing loans and sufficient capital and liquidity reserves.
Well-capitalised banks further supported the rapid growth of the fintech sector, expanding presence of e-payment service providers and the sustained expansion efforts of global BFSI majors establishing their Global Capability Centres (GCCs) in India.
“The sector’s resilience, coupled with the rise of digital infrastructure needs and diverse financial services, will fuel strong hiring in the coming months. Domestic banks are actively seeking skilled professionals in areas such as sales, wholesale banking, and treasury, signalling a dynamic era of growth and opportunity in the financial landscape,” said Anshuman Magazine, Chairman & CEO – India, South-East Asia, Middle East & Africa, CBRE.
Global Capability Centre (GCC) leasing by BFSI firms dominated more than half of the sector’s total BFSI office leasing during Jan-Sep 23 with 5.7 million sq ft, a 256% Y-o-Y growth as compared to 1.6 million sq ft across 6 cities during Jan-Sep 22.
The surge in GCC leasing by BFSI firms was spearheaded by Mumbai, accounting for 33% of the GCC leasing by BFSI firms in Jan-Sep’23, followed by Bangalore with 28% and Hyderabad at 20%. Large deals accounted for about 34% of the BFSI GCC deals in Jan-Sep’2023. BFSI GCCs are driving digital transformation for their parent companies, including specialised services such as risk monitoring, transaction taxation, and portfolio analysis.
“As the BFSI workforce increasingly values the fusion of technology and financial skills, the evolution of GCCs in India into second headquarters calls for a multi-generational agile workforce. This dynamic workforce seeks cross-functional, future-ready workplaces that serve as hubs for collaborative synergies and creative problem-solving,” said Ram Chandnani, Managing Director, Advisory & Transactions Services, CBRE India.
Although the BFSI sector has historically been cautious in adopting flexible spaces, CBRE anticipate a notable shift in this trend.
The report further underscores that during Jan-Sep23, leasing by global banks and investment banking firms accounted for almost 30% of the BFSI sector’s leasing, led by some large deals by American firms for their GCCs.
Global insurance firms have been expanding in India to enhance their GCC capabilities. Financial services firms are offering a plethora of services such as wealth management, loan, fund and trading services. These firms continue to account for the highest share in leasing, led by the expansion of such firms.
With an average lease deal size reaching nearly 60,000 sq ft, the BFSI sector surpasses the average deal size across the top five sectors by approximately 47% from Jan-Sep 23. Deals exceeding 100,000 sq. ft., classified as large-sized, constituted approximately 13% of the overall BFSI deals finalized in Jan-Sep 23, driven by heightened absorption from GCCs and domestic banks.
