Companies are increasingly investing in office fit-out, prioritising higher specifications to enhance employee engagement and wellbeing, aiming to boost attendance, retention and attract new talent, according to experts.
Data from Savills India shows a significant shift in office fit-outs, with about 35% now categorised as standard, 50% as mid-grade and 15% as high-grade, compared with pre-pandemic figures of 60%, 30%, and 10%, respectively, indicating a growing preference for premium spaces.
“This trend supports the hypothesis that office occupiers are placing greater emphasis on higher-spec offices compared to a decade ago, with the aim of attracting and retaining talent by offering superior work environments,” Savills India chief executive Anurag Mathur said.
Fit-out cost inflation remained relatively stable at 4-6% during the 2015-20 period, before the Covid-19 outbreak brought significant volatility to this sector.
“For a project with mid-range specifications, which could have cost ₹2,800 per sq ft, it should have risen to ₹3,275 in 2023, based on average inflation, but it has actually increased to ₹3,770,” Mathur said.
But technology has helped mitigate some of the cost escalation.
“The disruption has reduced dependence on imports, with the majority of parts required for office fit-outs now manufactured in India. Tech players like us have brought transparency to the segment, enabling end users to obtain quality work at a reasonable cost,” said Tushar Mittal, founder of OfficeBanao, a platform for office material suppliers and designers. “This is why not only big corporations but also smaller companies are driving demand for office fit-outs,” Mittal added.
The construction industry is estimated to have expanded 9.6% in real terms in 2023, driven by government’s continued focus on infrastructure development and the ongoing commercial development boom, coupled with a surge in foreign investment to set up back-end offices/GCC in India.
The interior fit-out segment, once relegated to the sidelines, too has undergone transformational evolution. Over the past decade, it has experienced a compounded annual growth rate (CAGR) of about 9%. With a projected CAGR of 7.9% from 2023 to 2030 globally, and an expected growth rate of 8.81% during 2024-2032 for the Indian interior design market specifically, the sector is poised for significant expansion.
This growth is underpinned by various factors, from urbanisation and modernisation demands to the evolving needs of a post-pandemic workforce seeking more adaptable and health-focused work environments.
