IT majors record office space absorption propels Bengaluru to top spot in India

Large global technology companies looking for expansion have led to record office space absorption in Bengaluru during the third and fourth quarter of calendar year 2020. The companies taking advantage of Covid-19 pandemic price correction have entered into pre-commitment deals with property developers.

Sensing urgency due to the pandemic, developers too in Bengaluru ensured quick deal closures in Q4 2020 and majority of the space abortion took place along eastern part of the city on the Outer Ring Road (ORR) averaging at ₹85-90 per sq ft per month.

Prominent companies which have committed office spaces in Bengaluru are: Ola 4.5 lakh sq ft, Apple 3.5 lakh sq ft, Google 10 lakh sq ft, Amazon 13 lakh sq ft, Siemens 7.3 lakh sq ft and Continental Automotive 8.5 lakh sq ft.

Office space hotspot

Shantanu Mazumder, Senior Branch Director, Bangalore, Knight Frank India told BusinessLine, “Bengaluru has always been a premier commercial market and a hotspot of capital investment in the country. The pre-committed activity remained strong with 2.47 million sqft of space being taken up in Q4 2020.”

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Bengaluru had the benefit of existing low vacancies that enabled absorption of much of the upcoming supply. “The city also has the advantage of relatively lower rentals than global markets, and a large talent pool should help in better than expected market revival as global economies move towards normalcy. Going forward, the city is expected to experience a rise in office rental values in 2021.”

Knight Frank India released its half-yearly report - India Real Estate: H2 2020. Quoting the report, Mazumder, said “Bengaluru has retained its premier position as the city registering highest office leasing volume in the country. The city recorded office leasing of 7.54 million sqft which accounted for 34 percent of the overall volumes across the eight markets in India.”

Residential market

Knight Frank India, in its half-yearly report, said the share of the above ₹50 lakh ticket size category, home sales remained stable in H2 2020 to 65 percent YoY. The residential property prices which were increasing in the beginning of 2020, have now softened a bit. However, with the underlying characteristics of the market and improved sales performance, the pricing power in the city has been maintained, the city recorded a marginal drop of one percent YoY in weighted average price during 2020.

Also read: H2 sees resurgence in office space market: Knight Frank

Bengaluru’s residential market recorded home sales of 11,402 units in H2 2020 and 23,576 units in the calendar year 2020. The city reported new launches of 9,123 home units in H2 2020 and 19,929 home units in 2020. South Bengaluru saw the highest quantum of homes sold in H2 2020 to 3,860 units followed by East Bengaluru with 3,750 units.