New Delhi: The demand for commercial space has grown at an 11 per cent Compounded Annual Growth Rate (CAGR) from 2020-25 in the top eight Indian cities, a report said on Friday. “Bengaluru has emerged as one of the most cost-effective workforce cities for global enterprises, the cost is almost 81 per cent lower as compared to Tier-II US cities,” Enquirus Capital, an investment banking firm, said in a report.
For comparison, the operating cost in a Tier-II US city per FTE (Full Time Employee) per BPM Business process management is indexed at 100; the same is 19 for Bengaluru (As of FY23).
According to the report, India has emerged as a high-growth, cost-effective office space destination, and businesses are looking at the nation for scalability, affordability, and a skilled talent pool. “The demand for commercial space in the Top 8 Indian cities has grown at an 11 per cent CAGR in the year 2020-25, from 39.3 million square feet (mn sq. ft) to 66.4 million square feet (mn sq ft),” the report noted.
As global office markets mature, Indian cities dominate the net absorption. The cumulative net absorption of office space from calendar year 2016 (CY16) to the first nine months of CY24 for cities like New York -5.4 mn sq ft, London -3 mn sq ft, Hong Kong 3.6 mn sq ft, Beijing 24.7 mn sq ft, Mumbai 39.6 mn sq ft, Tokyo 52 mn sq ft and Bengaluru at the top with net absorption of 75.2 mn sq ft, the report highlighted.
The office rentals as of Q3CY24 for Mumbai and Bengaluru were the most competitive among global cities. According to the report, London was the costliest in terms of rentals for office space at $207 per square feet (per sq ft) per year, while New York rentals recorded at $82, Tokyo at $76, Beijing at $56, Hong Kong $70, Mumbai at $27 whereas Bengaluru as the most affordable at $27/per sq ft per year.
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