India effect: Google triples office space in Mumbai

Rashmi Pratap Mumbai | Updated on July 19, 2018

Google India has taken up a 51,000 sq ft facility on seven-year lease in Mumbai’s most expensive business district Bandra-Kurla Complex (BKC) as it looks to expand operations in the world’s second-largest market of internet users.

The new facility is almost three times Google’s existing Mumbai office, also in BKC, the world’s 26th most expensive business location. The space has been leased on the ground and seventh floor of First International Financial Centre (FIFC), which also houses other global giants such as Apple, Citibank, McKinsey and Oracle.

Currently, Google has an office of 18,350 sq ft in Maker Maxity. “It is clear that Google intends to consolidate and relocate to FIFC from Maker Maxity when their lease expires in January 2019,” Raja Seetharaman, Director and Co-Founder of Propstack, a real estate analytics firm, told BusinessLine.

Emergence of BKC

The transaction shows that BKC has emerged as the Central Business District (CBD) of Mumbai with technology, consulting, BFSI & co-working companies making their primary base in Mumbai. “When you combine all the current retail and hospitality players, it completes the CBD story from a tenant mix perspective,” he said.

Google will pay a rent of ₹270 per sq ft, about ₹1.4 crore a month, for the new premises. There is a 15 per cent rent escalation clause every 36 months. Instead of the leave and license agreement, which Google had with Maker Maxity, it has this time gone for a seven-year lease considering that the space will remain Google’s Mumbai HQ as it expands further, Seetharaman added.

In licence agreements, the legal ownership and the possession of the property remains with the licensor. Under a lease agreement, which Google has opted for, the tenant generally has exclusive possession with respect to the property.

India interests

The US-based search engine’s growing interest in the Indian market is understandable. It commands 97.21 per cent of the search engine market share in India, ahead of competitors such as Yahoo and bing, according to statistics portal Statcounter. Its closest rival in India is bing, with a minuscule market share of 1.84 per cent.

Google has offices in four Indian cities — Bengaluru, Hyderabad, Gurugram and Mumbai. Its Hyderabad facility is the largest in the country.

Office space leasing is growing in India even as the residential market remains tepid. According to JLL, office space leasing will grow by an average 8 per cent to cross 100 million sq ft by 2020 in eight top cities on the back of robust demand from corporates.

Published on July 19, 2018

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