India would do well if it can maintain the momentum of office space absorption witnessed during 2023, given the high base and headwinds faced by the global economy, the CBRE chief for India projected.
Gross leasing in the top nine cities tracked by the international property consultancy CBRE stood at 41.8 million square feet at the end of nine months in CY23 compared with 56.5 million sq ft in 2022.
The consultancy expects that gross leasing will be in that range this year. It was 65.1 million square feet in 2019, the year before the pandemic.
“India will break the global trend in office demand. It is declining in Europe and the USA but India will be one of the countries to counter that, where the demand will be sustained. And even if we sustain, it will be an achievement,” Anshuman Magazine, chairman and CEO of CBRE in India, Southeast Asia, Middle East & Africa, said.
Magazine listed high base and global headwinds to the economy as the two factors that may impede ‘‘growth’’ in 2024.
“We talk about growth, but this amount of office space leasing is not happening anywhere in the world,” he noted.
The CBRE boss believed that offshoring by global business would continue to power leasing activities as they would look to leverage the competitive cost of operation and talent pool in India.
“Global Capabilities Centre (GCC) will continue to be the major source of demand. When economies in the US or EU slow down, people look to optimise costs. One of the ways to do so is offshoring,” Magazine explained, adding that India has an established track record of delivering services at a competitive cost to the large multinationals.
Magazine, who looks after many other regions, argued that the availability of a large talent pool is a big draw. While there are competitors in southeast Asia (Philippines, Malaysia) or East Europe, they can hardly match India’s scale of talent.
“It is not that specific skill sets are not available in those countries or in the US/EU. But they are not in abundance. India has an advantage on the count,” he explained.
The relative stability of the rupee against foreign currency also helps, Magazine argued, as the cost of construction of office space or cost of talent remains stable for the GCC operators.
Moreover, the familiarity of the country among the Indian diaspora also supports decision-making in offshoring here.
Red flags
While talent is abundant, Magazine, who was in Calcutta to participate in the 7th edition of Bengal Global Business Summit, suggested the governments at the states and in the Centre should do more in skilling people. “The young people have to be job-ready,” he pointed out.
He also batted for trickling down the ease of doing business at the ground level, while recognising the strides made in the recent years in this field. The CBRE boss also noted that India must also look at the maintenance of infrastructure at a global standard apart from building new ones.
