Colliers has found physical offices have a profound impact: particularly on an organisation’s digital transformation journey.
BFSI sector has seen a steady rise in demand in the last 2 years, with its share in total leasing regaining to 15% in H1 2023 from the pandemic lows. The resurgence in demand is fuelled by a healthy space take up by domestic & select global banks & financial institutions, supported by a higher rate of return to office. Domestic banks, insurance companies and financial institutions have witnessed an uptick in demand backed by improved economic outlook and heightened domestic demand.
Interestingly, majority of the large BFSI occupiers continue to prefer conventional office spaces & work mechanisms to suit their operational & technical requirements, keeping the demand for real estate space buoyant.
Offices provide an absolute opportunity to ensure customer experience along with employee satisfaction and productivity, collectively contributing to overall business performance while also addressing climate action goals.
Hybrid or remote work is adding new dimensions to the location strategy, with portfolios expanding and diversifying to include ‘hub’ and digital campus-type delivery models, as more occupiers are now exploring suburban and peripheral locations. There are also massive shifts in the ways office lease transactions are done today. For instance, Colliers’ APAC research and client interactions indicate that more occupiers are exploring shorter lease terms and flexible space to drive efficiency and construct diversified portfolios that cater to different ways of working.
According to Colliers, the Asia Pacific region has possibly the most exciting 12 months ahead, globally, both in terms of money coming into Asia Pacific and Asian money looking to be deployed into other regions.
Mumbai continued to drive BFSI leasing activity, grabbing one of every 3 deals during last 18 months (2022-H1 2023). During this period under review, the city accounted for approximately 31% of the total leasing by BSFI sector across the top six cities in India, with an absorption of over 3.2 million sq feet.
While Mumbai continues to attract higher BFSI demand, Bengaluru has also seen rise in space take up by BFSI occupiers in the last 4-5 years, as large global BFSI occupiers are setting up their technology and back-office operations in the city owing to its huge digital talent pool & robust infrastructure. In H1 2023, Bengaluru surpassed Mumbai in total BFSI leasing, accounting for 34% of the total leasing in the sector.
As digitisation remains core to financial services, BFSI players will continue to explore larger markets with presence of tech-hubs such as Bengaluru, Delhi-NCR, Hyderabad, Chennai, Pune. Tier II markets are also likely to witness heightened demand as occupiers look to setup & expand their back-office operations in these locations owing to improving infrastructure, availability of digital talent pool and favourable real estate costs.
