Tag Archives: Bengaluru property launches

What makes Bangalore attractive business destination?

Posted on by Track2Realty
Track2Realty Exclusive

Bottom Line: Bangalore has the highest office space consumption per household that indicates its high demand as attractive business destination. 

Bangalore City, Bangalore real estate market, India real estate news, Indian property market, NRI investment in Bangalore, Housing demand in silicon valley, Track2RealtyOne of the fundamental reasons why Bangalore has been the prime demand driver of residential real estate is that the city has a thriving economic activity. It is, as a matter of fact, the leading city in terms of the absorption of office space and that is fuelling the demand for the housing. However, it would be necessary to understand the dynamics of business & economy of the city to understand what makes Bangalore such an attractive business destination.

An analysis by Track2Realty vis-à-vis the volume of office space consumption per household – not only in India but also internationally in London, Singapore, New York, Tokyo etc concludes that there is equilibrium when the office space consumption is around 60-65 sq feet per household. In India it is rather surprising that the ratio per household even in a city like Mumbai is 25 sq feet. Kolkata has a dismal only 14-15 sq feet office space per household. In Delhi-NCR it is again 20-25 sq feet per household.

Bangalore is the only face-saver in India where the absorption is 50 sq feet office space per household which means the volume of office space and houses being supplied have been in equilibrium. That is the reason why Bangalore is a realistic market.

In London despite of so much population pressure it still has 50-55 sq feet per household. Singapore has 60-65 sq feet per household; New York has 160 sq feet per household. Now since Bangalore maintains that equilibrium it is so attractive to the end users. Investors won’t be attracted unless they are very long-term player. 

A JLLI report also points to the fact that Bangalore has helped India debut on the ‘City Momentum Index’ (CMI) Top 20 list this year– an annual survey carried out by Jones Lang LaSalle globally. Reinforcing the city’s status of being one of India’s premier technology centres, Bangalore figures at No. 12 in the Top 20 technology-rich cities globally. The economic as well as real estate momentum has gained pace as tech-industry majors line up to enter the market, or expand, here.

This also raises a question as to whether Bangalore is slowly shaping up as the next financial nerve centre. Ashish Puravankara, Managing Director, Puravankara Projects believes the companies are also realising the cost of doing business in Bangalore. The average rental cost of office space per sq feet in Bangalore is about 45 rupees and that works well for the companies. Then from the customers’ point of view, the average cost of housing in Bangalore is 5,500 rupees and that works well for their workforce. So, it is all supporting each other and it is not that one factor alone is driving the market.

“If the prices have become unaffordable due to high demand in the city, people would have started looking at Chennai. I am not sure about the question of whether Bangalore will be the next financial capital but this city has tremendous economic activity. The reason why companies are setting up offices here is cosmopolitan culture, great weather and access to educated workforce. So, all this is adding on to the employment and that employment is creating the housing demand. I know very many people who have moved from Delhi or Mumbai for work; they have no connection or roots here,” says Purvankara. 

With the share of per household office space consumption being highest in Bangalore, the question is whether the developers in the city have been beneficiary of this by default or they have been part of making the eco system conducive. 

Joe Verghese, Managing Director, Colliers International thinks it all came together and the developers have been lucky also and have also played very valuable role.

“I don’t want to undermine the value of their trust quotient. It is a fact that investor today trusts these guys more than any other developer in any other part of the country. The reason why they trust is that these guys have been more professional to keep their word. I don’t see too many disputes between the developer and investor or between the fellow developers in Bangalore market,” says Verghese.

It can be conveniently vouchsafed that even beyond the issue of cost of doing business and the ease of doing business, Bangalore has the potential to attract the business houses better than many other cities. One reason is weather and the other is safety.

For example, four large companies in Gurgaon are today planning to shift to Bangalore post the earthquake tremors in Delhi-NCR. They are large MNCs with 3-4 million sq foot facility in Gurgaon. The kind of list of compliances that they have, including safety, they have started working on moving to Bangalore.

Thus, while office market is a true indicator of the resilience of Bangalore real estate, there are several underlying factors supporting that. Collectively, they make Bangalore shape up as arguably the best business destination in the country.

Can Bengaluru’s infrastructure support vast real estate development?

Posted on by Track2Realty

Bottom Line: Faster implementation and collective effort is the key to success in Bengaluru’s infrastructure supporting real estate development, says a Colliers Research. 

Bangalore, Bengaluru, Bangalore real estate, Bangalore property market launches, Infrastructure in Bengaluru, Investment in Bangalore infrastructure, India real estate news, Indian realty news, Real estate news India, Indiaproperty market, NRIs in Bangalore, Track2Realty Bengaluru absorbs about 13-14 million sq ft of commercial office space every year, which is approximately one third of the total space leased in India. As per Colliers Research, the trend is likely to continue in the coming years.

The data analysis reveals that about 26 million sq ft of Grade A office buildings are under various stages of construction in the city which will completed by 2020. Most of this upcoming supply is concentrated in Outer Ring Road (ORR), which is a major commercial hub in Bengaluru.

“As on today, within ORR and Whitefield, the commercial office space stock accounts for approximately 78% of Grade A stock in Bengaluru. With infrastructure projects like the ORR metro line, and planned road improvement projects in and around these areas; the market is likely to remain bullish with respect to overall office space absorption in next 2-3 years, driven by IT-ITeS, followed by Engineering & Manufacturing and BFSI sectors. However, with more office supply coming in these markets, the pressure on infrastructure and support sectors is to increase multi-fold,” says Ritesh Sachdev, Senior Executive Director, Occupier Services, Colliers International India.

Bengaluru being a host to the largest share of technology start-ups (26%) in India, is the testing ground for co-working spaces and has always invited new occupiers, such as Capiot, InnerChef, Knowlarity, Monkey Box, Artifact Design, and many others. Moreover, the residential market is also developing to support the vast commercial development.

The story is good as far as the real estate development of the city is concerned, however, the unwelcome news is that the city’s infrastructure is unable to keep pace with the vast real estate development.

Bengaluru has seen an increase of 47% in population during the last decade (2001-2011) and the vehicle population growth rate is even higher than the population growth rate. The state government has started various initiatives and is going in the right direction to solve the infrastructure issues; Namma Metro being one of the initiatives. Phase 1 of the project connecting Nagasandra to Puttenahalli (Green line i.e North-South) and Mysore Road to Bayapanahalli (Purple line i.e East- West) corridors have been completed. Phase 2A, connecting Mysore Road to Challegatta near Kengeri and Yelachenahalli to Anjanapura is set to be completed by December 2018. This will push the demand in micromarkets such as Mysore Road and Bannerghatta Road.

Further extension of Phase 2 includes stretch between Silk Board and K.R Puram which is set to be completed by 2020. This will further boost demand in ORR accounting for 75% of the total leasing activity in Q3 2017.

Construction of underpass and widening of flyover along ORR at Hebbal Junction will improve commute time within the city’s major employment hubs. The National Highway Authority has also notified land for widening of NH 209 (948) till Kanakapura. With good accessibility to other parts of the city, these micromarkets are expected to improve further.

Although the government has started taking initiatives, the pace of development is slow. In our opinion, the government should also look at making the city sustainable to natural calamities. The time and again flooding of the city, brings the city to its knees. Along with the introduction of new infrastructure projects, the government should also focus on retrofitting the existing infrastructure.

According to Colliers Research following initiatives can be undertaken at three levels: 

One, at the citizen’s level, where they are imparted civic sense to follow the set rules of transportation like following the signals, crossing at footpaths, etc. This will ease the flow of traffic to a certain extent. 

The second initiative should be in identifying and implementing key infrastructure projects at a faster pace to improve the quality of living, to make Bengaluru a world class city. We believe that occupiers, investors along with the developers should make an effort to pressurise the government for the same. 

Bengaluru requires a comprehensive integrated sustainable public transport system like London and Singapore. Widening the road itself might not be the optimum solution for the problem. Efforts by all involved stakeholders, from citizens to governing bodies should work towards achieving a common goal, that is making Bengaluru uphold its name of Silicon Valley. 

Colliers Research says the infrastructure planned along commercial hubs such as ORR is likely to provide impetus to the real estate sector in ORR and nearby micromarkets, such as K.R. Puram and Hebbal. However, development of office assets without timely completion of infrastructure will leave the city in a chaotic state and may impact the office market adversely.