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The ongoing expansion and innovation of the technology sector in the Asia-Pacific (APAC) region, including India, is fuelling new possibilities for occupiers and owners alike. Tech companies are the major drivers of office leasing demand in the region, accounting for 20% to 25% of demand for leased office space over the next five years, property advisory Colliers said in a report on Tuesday.

Beijing, Shanghai, Bengaluru, Shenzhen and Singapore have ranked as the top five tech centres in APAC, offering infrastructure and talent for occupiers, and are well-positioned to deliver future growth and investment opportunities for owners, according to Colliers’ report titled ‘Growth engines of innovation: How Asia Pacific’s technology hubs are reshaping regional real estate’. Other cities such as Seoul and Hong Kong are developing strengths in specific areas of technology such as fintech, while Hyderabad and Sydney are emerging as new tech centres.

Among upcoming sub-markets are Yangpu in Shanghai, Whitefield and North Bengaluru in Bengaluru, Hitec City (suburban business district) in Hyderabad as well as Sydney’s CBD South, the report added.

“Demand from technology occupiers has been the mainstay of Indian commercial real estate. After reaching highs of 65-70% share in annual leasing volumes in the 1990s and 2000s, though the share declined to around 45-50% in the last decade, technology occupiers are expected to increase their share in the post-pandemic period," said Siddhart Goel, senior director and head of research, (India). “Indian office real estate is expected to maintain its competitive advantage over its APAC peers as over 45% of the sub-markets in top established and upcoming categories are from the cities of Bengaluru, Chennai, Delhi NCR, Hyderabad, and Pune. This is further supported by our research that shows that about 70% of the tech occupiers are MNCs compared to an average of 30-40% in many other APAC cities."

Interestingly, global tech companies in the past year have been vocal about adopting work-from-home and a hybrid workplace model going forward, leading to an overall uncertainty in leasing volumes of office space both in India and around the world. However, IT companies have been aggressively expanding their workforces which has led to the assumption that they may also need adequate office space to accommodate their employees.

With captive centres and the Business Process Outsourcing (BPO) sector dominating the office landscape in India, space per person has fallen from more than 150 sq. ft. in the early days to around 70 to 80 sq. ft. today.

“After covid-19, we expect this figure to increase and settle in the 100 to 120 sq. ft. per person range. Given the increased use of technology within the workplace and a more flexible approach from companies, we expect 20% to 25% of the workforce to be able to work from anywhere over the medium-to-long term," Colliers said.

While Bengaluru ranks higher than Hyderabad as a tech hub, the latter is attracting talent and multi-national companies to the city. Rents are 15-20% cheaper than Bengaluru as well.

“Overall, we foresee the south India markets leading the pack in terms of office leasing demand for the technology sector. The importance of technology companies as a source of leasing demand is only set to rise," said Arpit Mehrotra, managing director, office services (south India).

In addition to rent and rental growth, a key determinant for technology occupiers to grow is the availability of quality space at competitive rentals. With ample space in new or outlying districts, Bengaluru, Hyderabad, Shenzhen, Delhi-NCR, and Manila are the top markets by property factors, the report said.

Delhi-NCR’s micro-markets of Noida Expressway and Golf Course Extension Road in Gurugram have been featured amongst the top ten emerging sub-markets in the APAC region for tech occupiers.

“…We foresee buoyancy in the Delhi-NCR market, and once the restrictions are fully lifted, the market will witness an upswing. Colliers forecasts an increase in uptake from the SME segment, moving towards economical micro-markets in NCR," said Bhupindra Singh, MD, regional tenant representation (India).

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