India’s banking, financial services, and insurance (BFSI) sector has emerged as a dominant force in the country’s commercial real estate market, driven by a surge in office space demand, according to a report from JLL, a global real estate consultancy.
As of the third quarter of 2024, Mumbai leads in office occupancy, claiming roughly 44% of the total space used by domestic financial organizations, as published by Money Control.
The BFSI sector now ranks as the second-largest commercial real estate occupant in India, following the IT/ITeS sector. According to JLL data, BFSI’s share of office leasing has risen significantly, growing from an average of 11% between 2017 and 2019 to 17-18% in recent years.
Across India’s seven major cities—Mumbai, Delhi NCR, Kolkata, Bengaluru, Chennai, Hyderabad, and Pune—the BFSI sector accounted for 16.4% of the 53.4 million square feet of gross leasing activity through the third quarter of 2024.
Multinational corporations have spearheaded this growth, making up more than 65% of the office space leased by the BFSI sector. Over the past six years, international entities have consistently accounted for about two-thirds of the office space leased by BFSI companies. This trend reflects the increasing presence of global capability centers (GCCs) in India, where the fintech market is projected to grow from $584 billion to approximately $1.5 trillion by 2025. BFSI firms currently comprise about 20% of India’s 1,900 GCCs, which offer end-to-end services across various sectors, according to Rahul Arora, Head of Office Leasing & Retail Services and Senior Managing Director for Karnataka and Kerala at JLL India.
The JLL report highlights that Mumbai has maintained its lead in the domestic financial leasing space, while Bengaluru is increasingly popular among foreign financial organizations due to its robust tech ecosystem. Currently, Bengaluru accounts for 30% of the office space occupied by international BFSI firms, attracting top talent and financial companies from around the world.
Mumbai, Bengaluru, and Hyderabad together represent over half of the total space leased by the BFSI sector across India. Delhi NCR, with its strategic location, holds an 18% share in domestic BFSI leasing and a 17% share among international BFSI firms.
As noted by Samantak Das, Chief Economist and Head of Research and REIS at JLL India, the tech-driven cities of Bengaluru, Hyderabad, Chennai, and Pune have met over 80% of the demand for BFSI GCCs, while domestic BFSI leasing is concentrated in Mumbai and Delhi NCR, which collectively account for around 65% of such activity.
India’s BFSI sector is expected to see continued demand for commercial real estate, fueled by the sector’s growth and the expansion of GCCs nationwide. With the fintech industry on the rise, commercial real estate in India’s financial hubs is positioned for sustained growth driven by both domestic and international players.