Commercial space transactions indicate over 2.7 lakh office employment opportunities generated in top 7 cities in first 9 months of 2014


By: Anshuman Magazine, CMD, CBRE South Asia

india realty news, india real estate news, real estate news india, realty news india, india property news, property news india, india news, property news, real estate news, India Property, Delhi NCR real estate, Mumbai Real Estate, Bangalore Real Estate, Pune Real Estate news,Track2Media, Track2Realty, ravi sinhaTrack2Realty: Consequent to corporate real estate transaction closures during the first nine months of the year across the leading seven cities in the country, CBRE notices the potential generation of office employment opportunities of over 2,70,000.

The major demand driver for corporate real estate during the first three quarters of 2014 was predictably the IT/ITeS sector—which absorbed approximately 8 million sq. ft. of office space across the keycommercial districts—accounting for nearly 32% of this overall potential employment opportunity.

What was interesting to note, however, was the steady demand growth for office space from other sectors such as the Banking, Financial Services, and Insurance (BFSI) sector (almost 16%), the manufacturing and engineering sector (about 10%), and the consulting and research sector (10%), among others.

CBRE observes that over the past couple of years, the above-mentioned industries have steadily begun to expand their footprint across the seven major cities—lowering the dependence of India’s corporate real estate segment on the IT/ITeS sector to some extent.

The information technology industry in India, and its allied services, continue to remain strong in our leading cities, of course, with front office, back-end and combined office requirements. Bangalore leads opportunities in the IT sector, with a 32% share of the sector’s overall employment opportunities acrossthe top seven cities, followed by the Delhi National Capital Region (NCR) with an 18% share of the same, Chennai with a 16% share, and Hyderabad with a 14% share during the January–September period.

Even Mumbai and Pune, traditional bastions of the banking and financial sector, account for nearly 10% each of the potential urban employment opportunity generated by IT/ITeS in India for the first three quarters of 2014.

BFSI sector offers growing opportunities

Not surprisingly, nearly 60% of employment opportunities arising out of fresh office space take-up by the BFSI industry for office operations spanningleading cities during the period under revieware focused on Mumbai and Pune. What is surprising, though, is the fact that Pune—with over 30% share of the overall opportunity generated by the sector in the seven cities—has inched ahead of Mumbai (more than 25% share) in terms of space absorption by the sector.

This new trend may be due to the BFSI sector targeting Pune in recent times, with multi-national financial institutions increasingly absorbing office space in the city for their back-office requirements and other non-niche departments. At almost half the cost of Mumbai’s commercial property market (where these firms are already present), more reasonable manpower costs, and proximity to the financial capital—Pune’s quality office space options are increasingly finding favor with firms in the banking and financial sector.

Other cities offering office employment opportunities in this sector include Bangalore (17% share), Chennai and the NCR (10% share each).

Over the years, India’s BFSI sector developed on the basis of greater economic growth, rising incomes, a growing salaried middle class, product and services innovation, and a larger distribution of financial literacy.With the launch of the Jan DhanYojana by the new government a few months ago to spread banking services among the nation’s households, growth opportunities have further opened up for the sector.

Bangalore tops office employment opportunities

Commercial leasing in the first nine months of 2014 indicate Bangalore to be the top city in Indiato offer potential office employment opportunities, with approximately 30% share of the overallopportunity generated across sectors in the leading seven cities.The Garden City is followed by Mumbai (about 19% of the total share of the same) and Delhi NCR (nearly 18% share).

CBRE notes that apart from IT, the city also presents opportunities in sectors as diverse as manufacturing and engineering, consulting and research, and healthcare and pharmaceuticals. In the manufacturing and engineering sector, in fact, the city offers more than 50% of the overallemployment opportunity generated by the sector across the key cities. Companies such as Schneider Electric, Bosch and Titan Industries, among others,have transacted for office space (back-end, front-end and combined office operations)upwards of 100,000 sq. ft. in the city duringJanuary–September 2014.

The key reasons behind Bangalore being the center of such real estate activitycould be attributed to more rational commercial property values and abundant quality investment-grade office space—at a fraction of the cost of the other major metropolitan cities of Mumbai and the NCR.

The city has also gradually emerged as a preferred destination for major e-Commerce players establishing their commercial footprint in India, with more than 50% of space transacted in this segment over the past couple years having been concentrated here.

This may be largely because most leading e-retailfirms hadinitially set up their bases in the city, due to the availability of large floor-plate office spaces at comparatively affordable rentals over other major cities, before expanding their operationsfurther across the country.


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