Bangalore office space expansion is aiding speedy development in housing and retail markets.
Although Bangalore’s transformation from ‘garden city’ to ‘silicon valley of the east’ took almost 10 years – and the overall engaged office space touched 50 mn square feet in early 2009 – the subsequent round of growth is happening much quicker.
As per a report by Jones Lang LaSalle, office real estate is anticipated to touch the 100 mn square feet by 2016. That is a increasing of the stock twice in just 7 years from 2009, and a 50% growth to the existing level of about 70 mn square feet.
Bangalore’s office market has observed a compounded growth rate of 12% in the last 4 years, which is among the maximum in the country. In 2012, the leasing action in Bangalore’s office market guaranteed vacancy levels below 10%, which is lower than the national average of 15%. ““The demand-supply gap is the lowest in Bangalore, compared to all other metros in the country, which will not only ensure sustained growth but also an increase in rentals over the next few years,” said Sanjay Dutt, executive managing director, south Asia, Cushman & Wakefield, adding up that the city has seen the maximum occupation if office space in 2011.
“The availability of high quality, office spaces at sub–dollar rental levels and access to skilled workforce continues to drive Bangalore’s growth. The creation of new office space in the past three years has been rapid and at this rate, the city is expected to touch the 100 mn square feet landmark in record time,” says Karun Varma, MD, Bangalore & Kochi, Jones Lang LaSalle India.
According to the Jones LongSalle report, the landmark will have a wide range of references – from development of infrastructure and job formation to residential and retail growth. “The addition of 30 mn square feet to the existing stock in the next four to five years translates into an addition of around 300,000,” said Varma, totaling that the growth in employment will cause a increase in disposable incomes and therefore consumption.
Housing units being one of the most preferred traditional investment choices, a rise in income could mean an investment in second homes for many households. “The trend of second homes is gaining credence. “Bangalore’s residential market usually mirrors its office market trends and is driven primarily by end users. Keeping with the growing office market, the residential market will also continue to grow over the next five years,” said Sunil Mantri, chairman, Mantri Group.
With each square foot of office space leading to formation of three square feet of housing space, it is expected that a further 90 million square feet of housing space, factoring for almost 75,000 new homes, will be formed in Bangalore in the following five years.