Planning To Invest In Commercial Property? Bengaluru Could Be The Place For You
Be it large e-commerce giants or technology startups, a large number of companies are looking for office space Bengaluru. Even as top cities battle for inventory of commercial property, Bengaluru has been able to suffice the needs of the growing clientele for commercial property in the city.
E-commerce: A strong demand driver
Bengaluru has witnessed two mega commercial space deals in last six months. In May, it was Flipkart that leased almost two million sq ft of office space from the Group, with a commitment of 20 years. While in March, Amazon leased 1.3 million sq ft of office space in Bagmane.
This development shows that first, there is an emergence of technology-based companies of Indian origin, which will grow further in the future, thus calling for greater demand for office space. Second, it shows that the e-commerce market is here to stay, which is visible in the confidence when they signed the two-decade long deal.
Moreover, the city is further witnessing that many e-commerce and Banking, Financial services and Insurance (BFSI) companies are looking for office space space. If these deals are signed almost five million sq ft of office space will be leased out.
Though IT and ITeS sector continues to top demand driver chart for office space in Bengaluru, with a market share of around 36 per cent, e-commerce has debuted as the second largest driver in the list with a market share of 17 per cent, leaving behind BFSI, which contributes 16 per cent. Looking at these numbers, Bengaluru is sure a favourite among the IT and ITeS, and e-commerce companies.
Interestingly, even the startups ecosystem, now being backed by venture capitalists, is pushing the demand for more commercial space.
| Low vacancyAccording to a report on India Real Estate by Macquarie Research, Bengaluru remains the healthiest commercial real estate market with a vacancy rate of around eight per cent followed by Mumbai with over 20 per cent and National Capital Region (R) at 27 per cent. Moreover, the report suggests that Bengaluru contributes to around 40 per cent of total commercial real estate leasing in the country. The vacancy rate for Bengaluru is likely to remain under 10 per cent for the current financial year. What's interesting is with the strong demand, the commercial real estate developers with properties in Bengaluru will be able to hike rents by nearly five per cent. |
Making room for more
The Macquarie Research's report, which is bullish on the Bengaluru commercial real estate, says that the city has already received pre-commitments for the next two years of supply. This gives an ample room for real estate developers to invest and construct more commercial properties in Bengaluru.
Today, with a large number of blue-chip companies looking at upgrading to better quality office space, the demand for commercial space will only rise. To suffice this demand, over four million sq ft of constructed office space has already been added in the last quarter and more is expected to come. The new construction has been added largely in north of Bengaluru and around Outer Ring Road.
Backed by infrastructural development
The growing foreign direct investment (FDI) in businesses, along with start-up ecosystem, which have their headquarters here, is already making Bengaluru one of the fastest growing cities of the country. In order to maintain and further boost the growth, the state government is pro-actively boosting the infrastructure of the city with flyovers, in addition to Bengaluru's metro rail project, which is currently in the second phase of construction. These efforts will boost both, the commercial and the residential real estate market of Bengaluru and its suburbs.
(Katya Naidu has been working as a business journalist for the last nine years, and has covered beats across banking, pharma, healthcare, telecom, technology, power, infrastructure, shipping and commodities)