Global in-house leasing to reach 30-35 mn sq ft by 2021: Report

Global in-house (GIC) leasing is expected to drive demand over the next three years with leasing activity in this segment likely to be in the range of 30-35 million sq ft across the top six cities of Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai and Pune, says a survey.

According to a study conducted by global real estate services firm Colliers International, in the last five years, GIC leasing touched 53 million sq ft, cementing India's leading position as the world's global centre.

"With technology investments imperative to future growth, we expect occupiers will continue to invest in GICs, especially to develop centre of excellence, as R&D hubs, and innovation centres. We foresee GIC leasing to be in the range of 30-35 million sq ft, between 2019-2021, across the top six cities," its Senior Executive Director, Occupier Services, Ritesh Sachdev, said.

These top six cities will likely to remain the first choice for GICs, occupiers may consider Hyderabad, led by its ease of doing business, talent pool and quality upcoming supply, the report said.

It further said India is emerging as the undisputed leader in the GIC market led by a change in strategy among multi-national companies, further aided by competitively affordable rents in certain markets that offer sub-dollar rentals, a strong IT infrastructure, tax breaks and a highly skilled, English-speaking talent pool.

As per the research, energy and chemical companies are considering Mumbai, and tech and consumer electronics companies are looking for options in Delhi-NCR for GICs.

"We suggest pharmaceutical companies especially consider Hyderabad, where the government is developing a pharma city to create a healthcare ecosystem of companies. Pune is also a top pick for GICs for financial companies led by its proximity to Mumbai, competitive cost and diverse talent pool," he said.

Since GICs typically lease large spaces, above 1 lakh sq ft, and must adhere to these standards, the report suggested the GICs should set up and/or expand their operations in the suburban and peripheral areas of major cities, as seen in the table at right.

"We also foresee companies building campuses in peripheral locations in major cities, and in tier II cities like Vadodara in Gujarat, Thiruvanathapuram in Kerala, Coimbatore in Tamil Nadu, and Visakhapatnam in Andhra Pradesh. We expect availability of talent at low attrition rates, cost arbitrage, and a conducive policy environment enabled by certain state governments to drive demand by the IT industry in tier II cities," Sachdev added.