"India's Office Market Boom: A 16% Surge in APAC Demand and the Road Ahead"

The Asia Pacific region has witnessed a remarkable surge in office demand, with India emerging as a powerhouse, driving a 16% year-over-year increase in 2024. This unprecedented growth, as highlighted by Colliers' latest report, is a testament to the region's economic resilience and the strategic importance of India in the global office market landscape. The report, "Asia Pacific Office Market Insights H2 2024 and Outlook 2025," provides a comprehensive analysis of the factors fueling this growth and the potential implications for the future.

The surge in office demand across Asia Pacific's top markets, reaching 8.8 million sqm, is driven by a confluence of factors including corporate expansion, the return-to-office trend, and the growth of global capability centers (GCCs). India, Mainland China, and Japan have been the primary drivers of this demand, accounting for over 90% of the total office space demand in 2024. India, in particular, has seen a 16% year-over-year surge, with technology firms and flex space operators leading the charge. The country's robust demand is underpinned by factors such as rental arbitrage, abundant talent, and language proficiency, which continue to attract global capability centers and outsourcing hubs.



The growth of GCCs in India has significantly influenced the overall office market dynamics. According to Colliers' report, GCCs accounted for a 37% share in the overall office leasing in India during 2024. This substantial contribution highlights the pivotal role that GCCs play in driving demand for office space. Specifically, in the second half of 2024, GCCs leased 1.4 million sqm (~15 million sq ft) of office space in India, accounting for over 40% of the overall leasing during that period. This trend is driven by factors such as "rental arbitrage, abundant talent, and language proficiency," which continue to support the expansion of GCCs and outsourcing hubs in India.

The long-term implications for both domestic and international occupiers are multifaceted. For domestic occupiers, the presence of GCCs creates a competitive environment that can drive innovation and efficiency. Domestic firms, particularly in the technology and BFSI sectors, have been primary drivers of office absorption activity, maintaining dominant market shares of 50% and 45% on a quarterly and annual basis, respectively. This competitive landscape encourages domestic firms to seek modern, flexible, and sustainable spaces that foster collaboration and productivity, aligning with the "flight-to-quality" trend observed in the market.

For international occupiers, the growth of GCCs in India presents both opportunities and challenges. On one hand, the robust demand for office space driven by GCCs can lead to increased rental rates and higher occupancy costs. However, the presence of GCCs also creates a vibrant ecosystem of talent and innovation, which can attract more international firms to establish or expand their operations in India. This dynamic can further stimulate economic growth and create a more resilient office market.

Government policies and economic measures play a crucial role in sustaining the momentum of office demand in India. According to Mike Davis, Colliers’ Managing Director of Occupier Services, Asia Pacific, "The region is poised for continued growth in 2025 fueled by the expansion of global capability centres and supportive market dynamics including conducive government measures, controlled inflation, and easing borrowing costs." This indicates that favorable government policies, such as those that support economic growth and stability, are essential for maintaining the positive trajectory of the office market.

For instance, the report highlights that "India accounted for over 60% of the new supply in 11 top markets of the APAC region during H2 2024." This significant contribution to new office supply is likely driven by government initiatives that encourage infrastructure development and investment in the real estate sector. Additionally, the report mentions that "factors such as rental arbitrage, abundant talent, and language proficiency will continue to support the expansion of GCCs and outsourcing hubs in India." These factors are often influenced by government policies that promote education, skill development, and a business-friendly environment.

Looking ahead to 2025, the report estimates that "both demand and supply to strengthen across most APAC markets in 2025, with vacancy rates expected to remain rangebound." This suggests that continued government support and economic stability will be key to maintaining this momentum. However, any changes in government policies, such as increased taxes or stricter regulations, could impact the market negatively. For example, if the government were to implement policies that increase the cost of doing business in India, it could deter foreign investment and slow down the expansion of global capability centers, which are a significant driver of office demand.

In conclusion, India's 16% year-over-year surge in office demand within the Asia Pacific region in 2024 is a testament to the country's economic resilience and strategic importance in the global office market landscape. The growth of GCCs, favorable government policies, and a vibrant ecosystem of talent and innovation are key drivers of this demand. As we look ahead to 2025, continued government support and economic stability will be crucial for sustaining this momentum. The world must choose: cooperation or collapse.