 "William Beardmore-Gray, Shishir Baijal")
India’s office market is set to become the world’s fourth-largest office market with 1 billion square feet of office stock. Evolving from a tech-industry support base into a global hub for global capability centres (GCCs), India has become a clear market for global firms offering a combination of innovation and cost, with the quality of personnel on a par with global standards. William Beardmore-Gray, senior partner and group chair, Knight Frank LLP, and Shishir Baijal, chairperson and managing director, Knight Frank India, tell Vishal Chhabria and Prachi Pisal in Mumbai that the market is perfectly poised to take global leadership in the office space amid global slowdown. Edited excerpts:
You have been in this business for almost 35 years. What kind of changes have you seen, especially in the past few years, in the industry?
Beardmore-Gray: A significant change over the past 5 to 10 years has been the increasing influence of private capital in the investor space. While we’ve seen certain types of investors move in and out of the market, depending on economic conditions or geopolitical activities, private investors have grown in sophistication and have become a real constant. Private equity has continued over the past 5-10 years, and has grown in stature and become a massive influence, especially after the global financial crisis.
Companies are battling with what model they’re going to use. But their confidence is there, and they believe that it’s going to play an important part in their corporate culture.
We are seeing global uncertainties and layoffs by tech giants. Isn’t that a concern for your industry?
Baijal: There is a near-complete work-from-office now. In terms of the focus on proper collaborative spaces, ESG (environmental, social and governance) compliance, and wellness facilities, the use of space per person has increased substantially.
The need for GCCs and India-facing businesses in India has increased dramatically. These two factors have contributed to office demand.
The movement of GCCs that started three-four years ago is adding to the need for offices. These are the companies that believe in India. They are confident enough to have their own offices and capability centres.
Beardmore-Gray: One of the key drivers for global companies in India is the combination of innovation and cost. Two sides of a coin. India is one of the few places that can provide that, with the quality of the personnel being no inferior.
In the rest of the world, there is a slight grey area. There has been significant cost inflation over the past few years. Businesses are looking for ways to rationalise. It’s easy sometimes to say that artificial intelligence is the reason for that happening, and I sometimes think that’s unfair.
Occupiers want quality spaces to retain and attract the best talent. It will be a continued trend.
Where do you see India 5-10 years from now in size and its contribution to Knight Frank’s global business?
Beardmore-Gray: We have 20,000 employees around the world. Nearly 2,000 are in India. Asia is a massive focus for us over the next 5-10 years. It’s where we see real opportunity for growth.
We’re always focused on making sure that we’re following what our clients are trying to do and how we best support them through fantastic research, valuation, infrastructure advice, development, and consultancy across all sectors. We’ve never wanted to be all things to all people.
Baijal: India will continue to be the focus. Emphasis on India has never been greater in Knight Frank than it is today. Knight Frank believes in the growth story of India.
In my working life, for a substantial time, I have never seen an environment that is so volatile all over. But the long-term story of India is intact.
In 30 years, India got an office stock of 1 billion square feet. We are confident that the next billion will be in less than 15 years.
India is one of the largest contributors to Knight Frank outside the United Kingdom in terms of either people or revenue and profit.
What is your take on real estate investment trusts (Reits) in India?
Beardmore-Gray: Reits are becoming more the norm than the exception. They are seen as an efficient way for people to invest from a tax perspective as well. They have been well accepted. From the public investor’s point of view, liquidity is attractive.
Baijal: The returns have been good. They add liquidity to the system. They are an exit mechanism for developers and funds to come in. Importantly, they give individuals a chance to participate in the office market. The returns have been 13-14 per cent, which is okay.
In terms of investors, what kind of return expectations is there?
Baijal: It’s better today than it was earlier. With demonetisation, the Real Estate Regulation Act, goods and services tax, and the digitisation of land records, it’s a different environment today.
I’m not saying we are perfect, but we are well on the journey to a level playing field in which international investors are confident of bringing in the money.
Teens would be fine with investors. The problem becomes dollar-denominated returns, and that’s the issue, depending on how much they want to hedge and the cost of hedging.
In rupee-denominated returns, if they get it in the mid-teens, they are fairly happy.
Considering regulations in India, how do they compare from an investor’s point of view?
Beardmore-Gray: London is a mature and developed market. A lot of money going into that market is looking for partners who take a significant amount of risk, which might be there in any market.
There is a higher level of that potential risk in the Indian market. That is why people coming in are looking to partner local developers.
Baijal: Other than getting the right project, getting the right partner is the key. The partner is supposed to have the local knowledge and is supposed to take you through the rules, regulations, and state laws.
When an international fund comes in, it looks for a great local partner who will understand that part. It’s got much better today.
Where do you see India’s commercial real estate market compared to the other established global markets, particularly considering the current global economic environment?
Beardmore-Gray: I see it in an encouraging place because the US has had its issues after the pandemic, particularly with the return to office. India’s growth is significantly greater across most sectors than any other market.
From the investor’s perspective, what changes would you like to see in the Indian real estate market for it to become more attractive and easier to do business?
Beardmore-Gray: It’s become fairly transparent today. Today, we need to be a little bit more long-term and mature in our outlook.
Otherwise, India is as good as any other market for foreign funds to come in and invest. The issues that were there earlier are fairly well sorted out today.
What kind of investor sentiment is there when it comes to cross-border investment in India’s commercial real estate?
Beardmore-Gray: The global market is interested in India. It’s the question I’m asked most by investors, particularly around the Asia-Pacific region, about how we can invest in India.
Cross-border capital for the first half of 2024 was up 5 per cent globally. India was just outside the top five (sixth position) of those countries that people were most interested in.
Which regions are contributing the most?
Beardmore-Gray: It’s a combination of the United States, West Asia, and Japan. Singapore and West Asia have been two of the largest investors in India.
There are more funds today which hadn’t come to India and are showing an interest. Funds from Japan and Australia are looking at India. It’s different, and the India story is something that we need to tell them.
We need patient money for India. I believe in the India story; it’s not going to be quick in, quick out, make a return.
Private equity is starting to revive in corporate real estate. After the pandemic, we had seen a gap. Office spaces are getting better and more occupied, and rents are appreciating.
Beardmore-Gray: Significant long-term investors who are used to partnering best-in-class development are required. A few years ago, there were headwinds, the cost of capital rose, and there was inflation. Around October last year, markets around the world were beginning to pick up. At the end of March this year, I thought things were going to start moving, and then we had all the conversations around tariffs. Now, it’s easy to focus on that as the major issue.
But one has to look through that as far as one can because there probably is a long-term game. That sentiment is still there. There are investors with significant capital who want to take advantage of the markets and the opportunities that are there. Once we see the current tariff conversation settle down, we’ll see a bit more stability. I’m confident that it will happen.
You have been coming to India quite regularly. From a long-term perspective, what changes have you seen in this period?
Beardmore-Gray: In the past five-six years, what I love about India is the ambition and the dynamic nature of the country. What Mumbai has taken on in the past five years in terms of infrastructure and what’s arriving now is making a significant change to the day-to-day life of people within the city.
We’re going to see a significant change with what’s yet to be delivered by 2028-30. The demography of India is extraordinary. With the majority of the population under 30, the opportunity is massive, and it almost feels a bit strange to be saying that this evolution has only just begun. So, a massive positive change to the country.
Across the globe, there’s been a lot of debate about the mode of work. What impact do you think this will have on the long-term growth of the office segment?
Beardmore-Gray: In India, we’ve seen a 41 per cent year-on-year increase in gross office absorption in H1 2025, and that demand is there, particularly from GCCs.
We’re still in the space where occupiers are grappling with what the best model is for them. Globally, it differs from location to location.
In the past two-three years, there’s been a realisation that culture and collaboration in workplaces are hugely important to get the best results. Therefore, there’s been a drive to bring people back to the office.
Interestingly, the more flexible tech firms have wanted to pull people back into the office because that’s where they feel the best return is going to happen.
