Rental surge
Knight Frank, in its latest edition of the Asia-Pacific Prime Office Rental Index for Q2 2024 has noted that Delhi-NCR is the fifth most expensive office space rental market across the APAC region. Hong Kong SAR continued to be APAC’s most expensive office market during the quarter.
According to the report, transaction activities across India’s three major occupier markets saw a notable 50 per cent increase in Q2 2024, maintaining the robust occupier sentiment that has fuelled leasing activities since 2023, marking the highest levels since 2019. A majority of transactions was driven by India-facing businesses, reflecting a sustained strategic interest in India’s consumer markets and its skilled labour pool. Bengaluru retained its position as the leading destination among the three Indian cities, with 4.9 million sq ft leased in Q2 2024. The leadership teams actively encouraging employees to return to office has also positively impacted the transaction volumes in the market.
Prime office rental rates in Delhi-NCR, Mumbai and Bengaluru have remained stable in y-o-y terms and the current market momentum points to a stable rental in the rest of 2024 as well. In summary, the quarterly report revealed that 15 out of 23 tracked cities reported either stable or rising rental rates.
“India’s office space market has seen a surge in global corporate interest, reflecting the country’s status as one of the fastest-growing large economies,” affirms Shishir Baijal, CMD, Knight Frank India. “This has led to record-high transaction volumes in the first half of 2024, with a 33 per cent rise y-o-y, driven by Indian businesses and GCCs. Rental rates have remained steady in the three major occupier markets. With stable socio-economic and political conditions and a strong growth trajectory, we anticipate commercial office space hitting record highs.”
Remarkable growth The prime office market in Delhi-NCR has sustained rental values consistently over the past six quarters. With a prime office rent of R340 per sq ft per month, it ranks as the fifth most expensive office market in the APAC region. The prime office rent of in Mumbai was recorded at R302 per sq ft per month, ranking it as the eighth most expensive commercial market in the APAC region. Mumbai’s office leasing market demonstrated remarkable growth, with about 3 million sq ft leased, marking a 183.1 per cent y-o-y increase.
Bengaluru ranks 18th and is among the most affordable prime office markets in the APAC region. The prime office rent in the city was recorded at R137 per sq ft per month, with a marginal y-o-y increase of about 1.3 per cent. According to Tim Armstrong, global head, occupier strategy & solutions, Knight Frank, “The current trend reflects a business cycle downturn. Major office sectors such as finance and technology continue to downsize staff strength amid ongoing uncertainty in the business environment. This selective approach is likely to keep demand for office spaces restrained. Lease renewals will remain popular, while companies may also consider consolidating their office spaces due to falling rents prompting a flight-to-quality move. No doubt, occupiers face a slate of competing factors, balancing the new office culture and ESG objectives against business considerations. Despite reduced capital expenditure, occupiers are encouraged to remain aware of the region’s ample supply pipeline to explore quality options and capitalise on current conditions by securing favourable rates, given that new supply is expected to tighten due to high interest rates impacting future construction.”
Meanwhile, Knight Frank in association with 3AI, in their report Global Capability Centres and India Office Market Landscape, have cited that office absorption by Global Capability Centres (GCC) is estimated to reach 26 million sq ft by 2027 – up from 19.69 million sq ft in 2023. Transaction activities have increased by 16 per cent from 16.99 million sq ft in 2018, with GCCs completing 6,667 office leasing deals across eight major cities between 2018 and 2023. The growth of GCCs highlights India’s potential to enhance processes and drive business innovation.
IT/ ITeS sector GCCs lead the chart followed by BFSI and consulting GCCs. For BFSI, Mumbai leads with highest percentage of GCCs under the BFSI sector and Bengaluru leads with highest percentage of GCCs in the IT/ITeS sector.
“India’s GDP growth continues to be the fastest among major economies in the world, attracting attention for its strong infrastructure, and a consistent influx of top-tier talent and corporate entities. In the dynamic landscape of global business, India’s GCCs have evolved beyond traditional roles to become pivotal hubs of global strategy and local ingenuity. As India solidifies its position as a cornerstone of global GCC networks, these centres emerge as unparalleled hubs of creativity and collaboration,” says Baijal.
“The future of GCCs in India is promising, with projections showing over 1,900 centres by 2025, employing about 2 million people,” informs Sameer Dhanrajani, CEO, 3Ai. The emphasis will be on integrating advanced technologies, driving innovation and fostering sustainability. GCCs are expected to play critical roles in global operations, particularly in generative AI, customer-centric business development, and as-a-service transformations. By 2030, they will undergo significant transformation, becoming integral parts of global organisations. India centres will be led by leaders focused on innovating new products and services, shifting from their current form to essential drivers of business success.”
Between 2018 and 2023, about 5,349 GCC-focussed office deals were finalised under 50,000 sq ft across the 8 cities. Of these, 790 GCC deals took place between 50,000 and 100,000 sq ft, which can be marked as the medium segment. About 528 GCC deals of above 100,000 sq ft were the largest deals signed between 2018 and 2023.
“India’s GCC market is expected to grow unabated over the next few years,” says Rahil Gibran, national director, occupier strategy & solutions, Bengaluru, Knight Frank India. “It has already witnessed a high momentum with the current number of GCCs standing at about 1,600 plus in the country. The development of new GCCs specially catering to manufacturing sector has increased on a year-on-year basis. And the talent landscape mainly in the technology sector has evolved over the years to meet the growing demand of new GCCs, hence helping the growth of GCC in India.”
The current global operating model primarily balances roles based on location. The new distributed model incorporates centralised work-from-home strategies to minimise costs, while maintaining risk and effectiveness. Migration of roles within this new model can achieve higher savings and lower costs effectively. From the model chart, the hybrid model gives the maximum benefit for a GCC in India.
India remains a key hub for GCCs, alongside other destinations such as the US, Latin America, China, Europe, and the APAC region. India, the US and China stand out for their ease of hiring talent. Conversely, India, and the APAC region are noted for lower operational costs compared to global averages. Therefore, multinational corporations worldwide increasingly view India as a preferred destination for establishing or expanding operations, with US companies at the forefront of this trend.
WATER CONSUMPTION
Who cares?
Although Business Responsibility & Sustainability Report (BRSR) became mandatory for the top 1,000 companies measured by market cap since 2022-23, many of them were not able to measure some of the parameters. One such parameter is usage of water. Here, the measurement of water withdrawal is restricted to 2023-24. There cannot be any comparison with 2022-23, because of data inconsistency.
Reporting on water falls under principle 6 (businesses should respect and make efforts to protect and restore the environment) of BRSR. Specifically, under the ‘essential indicators’, the third question is with regard to water withdrawal and other details. But, under the ‘leadership indicators’ (which is not mandatory), the first question is whether the company is operating in areas facing water shortage and how much water is being withdrawn from these areas.
The accompanying table shows how companies have reported on water consumption. In the sample, as many as nine companies have drawn 100 per cent of water from areas facing water shortage.
For example, 3M India, which has manufacturing units in Ahmedabad, Bengaluru and Ranjangaon, informs: “All our plants are located in water-stressed areas”. SKF, which has units in Bengaluru, Haridwar and Pune, also has water shortage in all these areas, but the company has not given information on water withdrawn from each of these three regions; instead, it has given only the aggregate.
Wonderla Holidays is not a manufacturing company but runs amusement parks and resorts. Amusement parks account for 96 per cent of its revenue. The company has parks in Bengaluru, Kochi and Hyderabad, all of which have water shortage. As in the case of SKF, Wonderla too has given only the aggregate and not the specific quantity of water consumed in any of these cities, though all these companies are drawing its water requirements from areas facing water shortage.
The water withdrawal of Wipro, a software company, is 92 per cent from areas that have water shortage. The company says all its offices, except Mysuru, Kochi, Visakhapatnam and Bhubaneswar are in areas facing water shortage.
Another software company, Infosys, uses 87 per cent of its requirement from water-scarce areas. The company functions in 10 water-stress zones – Australia, India, Israel, Mauritius, Mexico, the Philippines, Romania, South Africa, Spain and the UAE.
Any withdrawal limit?
In the case of large banks, HDFC Bank, the third largest in terms of marketcap, has 8,734 branches, with presence in 4,065 towns and cities and a permanent staff strength of 213,365, as of March 2024), says BRSR. Water drawn by the bank for 2023-24 was 2,408,078 kl.
When asked to indicate if any independent assessment/evaluation/ assurance has been carried out by an external agency, the bank’s response was in the affirmative. It stated that independent assurance was carried out by Price Waterhouse for 2023-24 (see table).
This is a classic case of cherry-picking. Put simply, the bank has not got any assurance on the main issue – water consumption.
In terms of mcap, SBI is well below HDFC Bank, but in terms of branches it is bigger, with 25,258 branches and offices (put together) and a permanent staff strength of 228,679. Water drawn by SBI for 2023-24 was 2,796,159 kl. The bank says that data on water withdrawal/consumption and discharge in areas of water stress is not available.
While HDFC Bank and SBI have reported water withdrawal, Punjab National Bank, with 11,294 branches and offices (together) and a permanent staff strength of 102,349, has not done so. “The bank’s use of water is strictly limited to human consumption,” informs the bank in BRSR. “As we are not a manufacturing organisation, the prescribed table does not apply to the bank”.
Axis Bank, with 5,705 branches and a permanent workforce of 104,332, has compiled water withdrawal data for only nine offices.
Looking at these responses in the second year, one wonders whether these companies are serious about reporting water withdrawal.
Anjani Portland Cement: No water shortage, nor operating in areas having water shortage. “Our manufacturing location is not water-stressed and, hence, this section is not applicable.
APAR Industries: Not Applicable, as none of our facility/ plant is located in areas of water stress.
Asian Paints: As per the recent assessment report released by Central Ground Water Authority (CGWA) in December 2022, none of the company’s plants is located in the water-stressed area. Thus, the disclosure requirement is not applicable.
Bajaj Aut: As per the Central Groundwater Resource Assessment 2021 and 2022, no facility/ plant is located in water stress area.
Bayer Cropscience: There is no site located in areas of water stress.
Bhagiradha Chemicals & Industries: The company is not drawing, consuming or discharging in area of water stress.
Bharat Heavy Electricals: Gives no information on water withdrawal, consumption and discharge in areas of water stress. The company admits that an assessment/ evaluation/ assurance has been carried out by the Bureau Veritas (India).
Carborundum Universal: The company’s plant and office locations are not located within the area of water-stressed districts designated by the Central Ground Water Board, India.
CESC: None of the company’s operations are located in water stress regions as per recent reports of Central Groundwater Board.
Chalet Hotels: Not applicable, as the company does not have operations in water-stressed areas.
Coal India: The company ensures environmental responsibility by not operating any units in areas experiencing water stress.
Divi’s Laboratories: The facilities are not located in areas of water stress.
Himadri Speciality Chemicals: No operational sites come under water stressed area.
Igarashi Motors: None of the operations are in water stress area. Water stress areas were considered as per BRSR Block-wise ground water resource assessment 2022. Also, the manufacturing operations does not require water consumption.
R R Kabel: None of the company’s facilities are in a water-stress area.
TVS Motor Co: TVSM does not operate in water stress areas.
Usha Martin: No facility / plant is located in areas of water stress.
West Coast Paper Mills: As per the Central Water Commission (CWC) Kali River does not come under water-stress area.
AUTOMOBILES
Solutions for future mobility
JSW MG Motor India has launched DriEV.Bharat, a first-of-its-kind initiative aimed at promoting electric vehicles (EVs) in India. This reflects the carmaker’s commitment to advancing EV technology, accelerating the adoption of EVs, and building a robust EV infrastructure to ensure a uniform ownership experience. The long list of partners includes Jio, BPCL, HPCL, Tata Power, TERI, Shell, Adani, Chargezone, Lohum, and BatX, to name a few.
“We have recognised the need to keep life on our planet sustainable. One important aspect of sustainability is our choice of transportation, which is currently dominated by ICE vehicles and additionally burdens us with an annual bill of around $200 billion for crude oil imports. In India, the EV sector has accelerated at a tremendous pace, and we are reaching significant milestones on this path. This growth is set to continue. We have a close partnership with all leading EV stakeholders in this country,” said Rajeev Chaba, CEO Emeritus, JSW MG Motor India.
The event featured the launch of eHUB by MG, the industry’s first and largest charging platform by an OEM; Project REVIVE, focused on repurposing EV batteries beyond cars; EVPEDIA, India’s first dedicated educational and knowledge platform for electric car users; and the MG-Jio Innovative Connectivity Platform (MG-Jio ICP), which will be standard in all upcoming MG vehicles. eHUB by MG is intended to simplify the EV charging experience for customers nationwide by providing a single platform. The company also introduced Project REVIVE, an initiative in partnership with TERI, Lohum, and BatX, aimed at repurposing EV batteries beyond cars to provide a second life as renewable energy storage systems for sustainable community applications. This initiative promotes a circular economy, a system designed to eliminate waste and continually use resources through the principles of reuse, repair, and recycling, supporting India’s clean energy goals.
Information on EVs
Reinforcing its commitment to enhancing consumer awareness and addressing their queries, JSW MG Motor India launched EVPEDIA – an industry-first dedicated the EV education platform. This initiative provides reliable, accurate, and engaging information on EV technology, benefits, costs, and maintenance. By debunking myths and fostering informed decisions, EVPEDIA builds EV advocacy and promotes broader EV adoption.
The carmaker also announced that all upcoming MG cars will feature the MG-Jio Innovative Connectivity Platform (MG-Jio ICP) as a standard inclusion. This technology stack introduces several firsts, including the MG App Store for in-car gaming, entertainment, and learning, superior voice capability in six Indian languages, and a ground-breaking Home-to-Car functionality. At the event, a panel discussion was held among industry experts from EY and IIT, focusing on the long-term benefits of EVs.
Gaurav Gupta, Chief Growth Officer, JSW MG Motor India, highlighted the company’s vision to redefine the future of electric mobility in India. “DriEV.Bharat reflects our unwavering commitment to advancing EV technology and enhancing the user experience to accelerate EV adoption. With initiatives such as our unified charging platform, battery second-life project, EV education, and the MG-Jio ICP, we are empowering the industry as well as our customers with smarter, more sustainable choices.”
JSW MG Motor has launched the country’s first internet electric SUV, the MG ZS EV, and the innovative Street-Smart urban mobility solution, the MG Comet EV. Committed to fostering a comprehensive EV ecosystem, the brand offers six charging solutions and aims to install 1,000 community chargers nationwide. Through strategic partnerships with key industry players and initiatives like the MGDP and MG Nurture, JSW MG Motor has engaged with over 1,500 start-ups and collaborated with more than 50 colleges to drive EV education and skill development.
Another initiative, eHUB by MG, is a one-stop solution for EV charging, simplifying the process of locating, reserving, and paying for charging stations. With access to almost the entire charging network of the country through partnerships with leading providers like Adani Total Energies, BPCL, Chargezone, Glida, HPCL, Jio-BP, Shell, Statiq, Zeon, and many others soon to be on-boarded, eHUB offers a seamless charging experience. Available in 11 languages and equipped with trip-planning features, the app provides a hassle-free EV charging experience.