Bottom Line: As Indiaâ€™s technology sector expands its horizons, Bangalore has emerged as a dominant growth frontier offering the countryâ€™s new economy sectors such as information technology, biotechnology, aerospace, research and development, clean energy and other services sectors, a new growth paradigm.
According to CBREâ€™s latest major reportâ€”Bangalore: The Star That Shines the Brightestâ€”the city has led the countryâ€™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.
Sustained demand for office space has consistently driven commercial real estate growth in the city that crossed a milestone in mid-2013â€”by becoming the first Indian office hub to join the global club for 100-million-sq. ft. office markets.
Furthermore, the year 2015 recorded the highest quantum of new office space supply of nearly 12.7 million sq. ft. The cityâ€™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.)
Commenting on the report, Anshuman Magazine, Chairman and Managing Director of CBRE, South Asia said, â€śBuoyed by improved economic sentiments, steady corporate occupier interest, and its intrinsic strengths as a pioneering hub for technology, R&D, and shared services platformsâ€”Bangalore is likely to maintain its leadership position in the countryâ€™s corporate real estate market in the long term. The successful implementation of the Governmentâ€™s policy schemes, such as Digital India, Skill India, and Make in India, will be critical for the further development of the cityâ€™s business environment.â€ť
As per an office occupier sentiments survey conducted by CBRE in India during 2015, Bangalore emerged as the most preferred market among Indian cities for occupier expansion strategies over the next two years. The cityâ€™s successful corporate space has been primarily driven by political stability over the years, the countryâ€™s largest expatriate population, and availability of top talent for business.
Other advantages offered by Bangalore have 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.
â€śBangalore 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 cityâ€™s commercial real estate skyline. These will play a positive role in supporting the long-term expansion of the cityâ€™s commercial office sector,â€ť said Ram Chandnani, Managing Director â€“ Transactions Services, CBRE South Asia.
In a little over two decades, prominent corporate firms have established a large footprint in the city and driven Bangaloreâ€™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), Bangaloreâ€™s investment grade office stock grew exponentially from less than 20 million sq. ft. in the early 2000s to 127 million sq. ft. in 2015â€”at 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.