Bengaluru remains top commercial realty market for five years in a row
BENGALURU: Bengaluru hasled the country’s corporate real estate market among leading cities over the last five years in terms of office space stock as well as office space absorption trends.
According to CBRE’s latest major report Bengaluru : The Star That Shines the Brightestat 127 mm aft the city is likely to remain India’s top corporate real estate market in coming years.
Furthermore, the year 2015 recorded the highest quantum of new office space supply of nearly 12.7 million sq. ft. The city’s overall commercial office stock stands at approximately 127 million sq. ft.; compared to other prominent commercial hubs such as Delhi National Capital Region (NCR) (95 million sq. ft.) and Mumbai (87 million sq. ft.)
As India’s technology sector expands its horizons, Bengaluru has emerged as a dominant growth frontier offering the country’s new economy sectors such as information technology, biotechnology, aerospace, research and development, clean energy and other services sectors, a new growth paradigm.
Sustained demand for office space has consistently driven commercial real estate growth in the city that crossed a milestone in mid-2013by becoming the first Indian office hub to join the global club for 100-million-sq. ft. office markets.
Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia Pvt. Ltd. said, “Buoyed by improved economic sentiments, steady corporate occupier interest, and its intrinsic strengths as a pioneering hub for technology, R&D, and shared services platformsBengaluru is likely to maintain its leadership position in the country’s corporate real estate market in the long term. The successful implementation of the Government’s policy schemes, such as Digital India, Skill India, and Make in India, will be critical for the further development of the city’s business environment.”
As per an office occupier sentiments survey conducted by CBRE in India during 2015, Bengaluru emerged as the most preferred market among Indian cities for occupier expansion strategies over the next two years. The city’s successful corporate space has been primarily driven by political stability over the years, the country’s largest expatriate population, and availability of top talent for business. Other advantages offered by Bengaluru has been its connectivity with other parts of the country, an extensive public transport system including its efficient bus network and partially operational Metro Rail (Phase I). Its well established social infrastructure and good climate are other advantages that attract and retain businesses in Bangalore.
“Bangalore will continue to offer technology firms and allied sectors a stable business environment and access to a large, skilled labor pool. Consequently, while technology sectors and back-office operations will continue to remain the principle demand drivers, new sectors such as e-commerce, online start-up ventures and biotechnology will increasingly contribute to building the city’s commercial real estate skyline. These will play a positive role in supporting the long-term expansion of the city’s commercial office sector,” said Ram Chandnani, Managing Director – Transactions Services, CBRE South Asia Pvt. Ltd.
In a little over two decades, prominent corporate firms have established a large footprint in the city and driven Bangalore’s commercial market forward. The availability of good quality office spaces at affordable rents as compared to office markets in Mumbai and Delhi NCR, and the cosmopolitan nature of the city, has further stimulated office space demand in recent years. With the completion of numerous larger sized technology parks and Special Economic Zones (SEZs), Bengaluru’s investment grade office stock grew exponentially from less than 20 million sq. ft. in the early 2000s to 127 million sq. ft. in 2015at a compound annual growth rate (CAGR) of 13% over the last 15 years. This has placed the city well ahead of other leading Indian office hubs.
At present, corporate occupiers remain focused on the Outer Ring Road (ORR) stretch between Marathalli and Sarjapur Road; going forward, an incremental shift towards newer locations such as North Bangalore is expected. This is mainly owing to factors such as attractive lease rents, improving social / physical infrastructure and residential developments in the vicinity of the office clusters.