With 6.8 million square feet, BFSI leasing recovered in 2022 and surpassed pre-pandemic levels. In H1 2023, higher domestic demand helped the BFSI sector’s share of overall leasing increase once again to 15%. Bengaluru came in second with 24% of the leasing market, trailing Mumbai’s 31% share.
According to Colliers, the banking and finance industry is currently undergoing fundamental changes with a transformative focus on digital, workforce, and Environment, Social, and Governance (ESG) priorities. According to Colliers experts, banking and finance companies are currently at a turning point after making significant investments in technology, people, and workplaces.
Real estate now plays a huge role in influencing successful business outcomes as banks and financial services firms rethink their future with Artificial Intelligence and next-gen technologies, integrating a diverse workforce with new ways of working. The industry’s digital, workforce, and ESG goals can be powered by it. Colliers has discovered that physical offices have a significant impact, particularly on a company’s journey toward digital transformation.
Demand in the BFSI sector has steadily increased over the past two years, and in H1 2023, it recovered to 15% of total leasing from pandemic lows. A healthy space take-up by domestic and select international banks and financial institutions, supported by a higher rate of return to office, is what’s driving the uptick in demand. As a result of an improved economic outlook and increased domestic demand, domestic banks, insurance companies, and financial institutions have seen an increase in 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.
