The recent draft Global Capability Centre (GCC) policy of Karnataka proposed numerous GCC-specific incentives, aimed at establishing three Global Innovation Districts in the state.
Experts say the additional announcement about setting up new GCC districts will provide further fillip to GCC investments and amplify real-estate space uptake by such companies in the state, especially in north Bengaluru.
This comes after Chief Minister Siddaramaiah announced on November 19 that the upcoming Bengaluru GCC district or the Global Innovation District will be part of the Knowledge, Wellbeing, and Innovation City (KWIN City), located 45 minutes from the Kempegowda International Airport.
"The office market of Bengaluru is significantly driven by GCCs. With GCCs accounting for almost half of Bengaluru’s Grade A office space demand, the city can potentially witness annual GCC space uptake of about 8-10 million sq ft for the next few years," Vimal Nadar, Senior Director & Head, Research, Colliers India, told Moneycontrol.
Additionally, in the long term, the conducive policy environment can supplement Bengaluru’s office market with a favourable GCC ecosystem in emerging hotspots such as Mysuru, Mangaluru, Hubballi-Dharwad-Belagavi etc., Nadar added.
What is the new GCC district?
A GCC is a fully owned, offshore or nearshore entity that provides a variety of services to a parent company.
Speaking at the Bengaluru Tech Summit 2024, the chief minister said that the state government will establish three dedicated Global Innovation Districts in Bengaluru, Mysuru, and Belagavi. These will be dedicated parks for GCCs to set up shop in the state.
Bengaluru Global Innovation District will serve as a global hub for innovation and research.
On September 26, the CM unveiled the plan for KWIN City, which is spread across 2,000 acres, between Dobbaspete and Doddaballapur on the Satellite Town Ring Road (STRR).
Boost to office footprint in north Bengaluru
Nadar said that the announcement to set up a dedicated GCC district holds considerable long-term real estate development potential in north Bengaluru, beyond Yelahanka and areas adjoining Dobbaspet and Doddaballapur.
With close proximity to the international airport and anticipated state-of-the-art infrastructure within KWIN city, GCCs can augment the commercial and residential activity in the northern peripherals of the city.
The peripheral parts of north Bengaluru that are coming up with major office footprints today saw 1.1 million sq ft of Grade A office space absorption in Q3 of 2024. It witnessed the highest absorption, compared to other parts of the city, only behind the peripheral eastern IT hub of Whitefield, with 2.1 msf of leasing, according to data from Cushman and Wakefield.
"This concentrated hub will demand modern, tech-enabled office spaces, thereby raising the demand for high-quality, well-located grade A office properties. Consequently, developers and landlords will likely see heightened occupancy rates, particularly in prime business areas. Such infrastructure development will also generate interest in premium flexible spaces as global players seek to position themselves within this innovative ecosystem," Manish Khedia, Managing Director, South India, West India and Sri Lanka, The Executive Centre, said.
GCCs to drive flex office spaces in the city
Experts say that GCCs are now increasingly open to flex spaces for their expansion strategies, owing to the flexibility and scalability offered by them.
This trend is driven by the desire for agile and cost-effective solutions, and flex spaces can potentially aid GCCs in optimising their real-estate portfolios.
"Additionally, with the growing popularity of distributive work models such as 'hub-and-spoke', GCCs can potentially set up smaller offices in Tier II cities which benefit from their close proximity to Bengaluru. Flex spaces are particularly well-positioned to meet the demand-supply mismatch of premium office spaces in smaller cities of the state," Nadar added.
The hub-and-spoke model is a distribution network where a central hub is connected to multiple partner organisations, known as spokes.
According to Khedia, flexible workspaces offer agility, allowing businesses to quickly adjust to evolving workforce sizes and team functions. Given the rapid growth of GCCs, companies will seek flexible options as they establish themselves and grow within the region.
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