For the first time in a decade, the BFSI (Banking, Financial Services and Insurance) sector has eclipsed the technology sector and emerged as the key driver of office space demand in the first nine months of this year, according to CBRE. This resurgence was primarily fuelled by the strategic expansion of global BFSI companies through Global Capability Centres (GCCs) in India.
While the share of IT sector in total office space leasing has declined from 37% in 2019 to 23% this year due to the broader slowdown in the sector, the share of BFSI has more than doubled from 11% to 23% in the same period, the real estate consultancy said. This was mainly due to the robust performance of BFSI firms, who have reduced the share of bad loans on their books to multi-year-lows, besides improving their capital and liquidity reserves.
Well-capitalised banks further supported the rapid growth of the fintech sector, the expanding presence of e-payment service providers and the sustained expansion efforts of global BFSI firms establishing 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.
GCCs grabbed the lion’s share of BFSI office space, occupying over 5.7 million sq ft across six major cities in the first nine months of 2023. This marked a threefold jump from the 1.6 million sq ft leased in the same period last year, underscoring the growing footprint of GCCs within the BFSI sector.
| Cities | % BFSI GCC leasing
(Jan-Sep’23) |
Absorption in Jan-Sep’23
(In mn. sq. ft.) |
| Mumbai |
33% | 1.88 |
| Bangalore | 28% | 1.59 |
| Hyderabad | 20% | 1.14 |
| Chennai | 9% | 0.51 |
| Pune | 9% | 0.51 |
| Delhi-NCR | 2% | 0.11 |
The surge in office space leasing for GCCs by BFSI firms was spearheaded by Mumbai. India’s financial capital accounted for 33% of the demand, followed by Bengaluru and Hyderabad at 28% and 20% respectively.
Large deals comprised about 34% of BFSI GCC deals in the nine months ended September. BFSI GCCs are driving digital transformation for their parent companies, including offering 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.
| Cities | BFSI office leasing share (2018-Sep’23) | Absorption in Jan-Sep’23 (in mn. sq. ft.) |
| Mumbai | 30% | 2.94 |
| Bangalore | 20% | 1.96 |
| Hyderabad | 15% | 1.47 |
| Delhi | 11% | 1.07 |
| Pune | 11% | 1.07 |
| Chennai | 9% | 0.88 |
| Ahmedabad | 3% | 0.29 |
| Kolkata | 1% | 0.09 |
Although the BFSI sector has historically been cautious towards flexible spaces, CBRE anticipates a notable shift in this trend.
The report further says that leasing by global banks and investment banking firms comprised nearly 30% of the BFSI sector’s leasing, led by some large deals by US firms for their GCCs during the first nine months of this year. Global insurers have also been expanding in India to enhance their GCC capabilities.
With an average lease deal size of nearly 60,000 sq ft, the BFSI sector has surpassed the average deal size across the top five sectors by about 47% during the January to September period.
Deals exceeding 100,000 sq. ft., classified as large-sized, comprised about 13% of overall BFSI deals finalized during the period, driven by accelerated absorption by GCCs and domestic banks, the report said.
