Startup Boom helps Bengaluru beat Delhi, Mumbai to become India's Costliest Office Space

Mumbai, Aug 27 (PTI) With a 9 percent spike in rentals in Q2 2019, Bengaluru's Central Business District (CBD) has unseated Connaught Palace and Bandra Kurla Complex (BKC), to become the costliest prime office space in the country, and the fifth across the Asia-pacific region.

Bengaluru CBD saw the highest annual growth in rental values in India, with current rentals at Rs 125 per sq ft per month, according to a survey conducted by Knight Frank.

The report said, the BKC and Connaught Palace, which make up the prime office markets in Mumbai and the NCR respectively, were ranked 8th and 12th at the end of Q2 2019.

The Knight Frank Prime Office Rental Index tracks rental levels of 20 frontline cities across the Asia-Pacific region.

Mumbai's BKC registered a growth of 5 per cent in the quarter and was recorded at Rs 300 per sq ft a month. New Delhi's Connaught Place recorded a rental value of Rs 330 sq ft a month also recorded an annual rise of 1.4 per cent during the quarter.

Cities like Melbourne saw the highest rental growth y-o-y at 16 per cent, while Tokyo (12 per cent), Bangkok (10.4 per cent) and Singapore (10.3 per cent) were the other prime office markets that saw higher y-o-y rental growth rates ahead of Bengaluru.

Indian office rents remained stable in Q2 as the market saw an influx of new supply in H1 2019, with 23 million sqft being added during the period.

"The office markets of India have withstood headwinds from global and national economic conditions and depict an impressive growth story. The leasing volumes have grown consistently and are at historic highs, which indicates a high level of confidence that the corporate world has in the India story, especially from a long-term perspective," Knight Frank India chairman and managing director Shishir Baijal said.

He further said the IT/ITeS sectors continue to absorb the lions share of new space coming online, accounting for 35 per cent of all transacted volumes in H1 2019 but has started to show signs of slowing on lower corporate spending and moves towards in sourcing.

"However, this weakness has been offset by strong demand from co-working operators; co-working transaction volumes rose 42 per cent year-on-year to 4 million sqft in H1 2019," Baijal added.

He further added that a strong rental trend will be a force majeure for the growth of investments in this segment going forward. PTI PSK

Office Space Leasing by Co-Working Players Rises 42% to 4 Mn Sq Ft in Jan-Jun

Co-working space operators have leased 4 million sq ft of office space across eight major cities during the first half of 2019 to meet rising demand of such flexible area from corporates and startups, according to property consultant Knight Frank.

Co-working players had leased 2.8 million sq ft in the January-March period of last year.

"The co-working story - that is a global phenomenon - has taken root in India," the consultant said in its report 'India Real Estate' released recently.

The report tracks residential and office markets of eight top cities -- Delhi-NCR, Mumbai, Chennai, Kolkata, Bengaluru, Hyderabad, Pune and Ahmedabad.

"Across the top eight cities, co-working space providers have taken up around 4 million sq ft of office space during H1 2019 which represents a 42 per cent growth over H1 2018 and accounts for approximately 15 per cent of the total space transacted during this period," the report said.

Total office space leasing rose by 26 per cent to 27.4 million sq ft in these eight cities during the first six months of 2019, with IT/ITeS sector accounting for 35 per cent of absorption.

"The co-working sector is growing aggressively on the back of growing demand from regular enterprise occupiers. They have begun to appreciate the design elements, community development, office environment and the vibrancy created in the co-working spaces.

"Many co-working operators have on an average 70+ per cent of their space occupied by larger enterprise clients," Knight Frank India Executive Director (North) Mudassir Zaidi told PTI.

Newer players backed by PE investments are entering the space, which is also leading to newer supply being created in most cities, Zaidi added.

According to the data, Bengaluru was the most preferred location for co-working players where they leased 1.7 million sq ft office space, up 33 per cent from the year-ago period.

Leasing of office space in Hyderabad by co-working operators more than doubled to 0.7 million sq ft from 0.3 million sq ft area during the period under review.

In Chennai, co-working players leased 0.4 million sq ft as against 0.1 million sq ft.

Pune saw 0.4 million sq ft leasing of office space by coworking firms from nil in the year-ago period.

However, co-working players leased less space in the national capital region and Mumbai during the first half of this year.

In National Capital Region (NCR), leasing dropped to 0.5 million sq ft from 0.7 million sq ft, while in Mumbai absorption fell to 0.3 million sq ft from 0.5 million sq ft. PTI MJH

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Bengaluru Ranked World’s Most Affordable Tech Hub, Followed By Gurugram At 2nd

The Indian subcontinent has built an impressive profile for itself in the global tech scene. Considered as one of the most sought after location for tech companies in the world, the country has seen some of the biggest tech companies in the world establishing their local offices here or in some cases even moving their whole operations here. Recently, we reported how New York-based global technology and innovation giant IBM now employs more people in India than in any other country, including its home country.

Cementing India’s location preference in the global tech world is a recent report by realty consultancy firm Knight Frank. According to the study, which ranked 29 global technology hubs, Karnataka capital Bengaluru is the world’s most affordable technology hub, followed by Harayana’s Gurugram.

Knight Frank believes that the IT sector in Bengaluru has contributed significantly in transforming the city’s character, turning the pensioner’s paradise into a bustling cosmopolitan hub. This has helped in stirring up its real estate market, which has become a major global office destination.

The inclusion of Bengaluru in the Smart City list - an ambitious Indian government project to enhance liveability in urban centres, is also expected to lead to improved infrastructure; providing smart solutions to bridge service delivery gaps and enable technology use. The firm believes this will further attract real estate investors to the city.

According to the report, Bengaluru has the cheapest office rentals to offer, followed by Gurugram on the second spot. The report further elaborates that the eastern Whitefield area in the eastern Bengaluru is the most affordable technology district in the world, with a current rent rate of $9.65 (Rs 632) per sq feet.

Coming to Gurugram, which is the only other Indian tech hub to have found a place on the list, the current office space rent rate in the area is $20.40 (Rs 1,335) per sq feet, according to the report by Knight Frank. It further elaborates that here the cost to the firm, for employing and accommodating 100 people comes to be around $1.3 million (Rs 8.27 crore approximately) annually, which is the lowest in the world. This makes the millennium city a lucrative option for tech firms starting up their operations in the country. On the other hand, the survey has placed Zurich, a Swiss city known as a hub of banking and finance, is the costliest on this front.

Globally, London is the costliest in office rental values at $90.75 (Rs 5,940) per sq feet.

Commenting on India’s performance on the list, Viral Desai, a senior official at Knight Frank India, spoke to Deccan Herald and said that India’s office market had witnessed a stellar run in 2016 as compared to the recent past. Desai believes that based on the report it can now be fairly accepted that India is home to some of the most affordable Central Business Districts in the world.

This development was first reported in Deccan Herald.

[Image: YourStory]

Bengaluru Ranked World’s Most Affordable Tech Hub, Followed By Gurugram At 2nd

The Indian subcontinent has built an impressive profile for itself in the global tech scene. Considered as one of the most sought after location for tech companies in the world, the country has seen some of the biggest tech companies in the world establishing their local offices here or in some cases even moving their whole operations here. Recently, we reported how New York-based global technology and innovation giant IBM now employs more people in India than in any other country, including its home country.

Cementing India’s location preference in the global tech world is a recent report by realty consultancy firm Knight Frank. According to the study, which ranked 29 global technology hubs, Karnataka capital Bengaluru is the world’s most affordable technology hub, followed by Harayana’s Gurugram.

Knight Frank believes that the IT sector in Bengaluru has contributed significantly in transforming the city’s character, turning the pensioner’s paradise into a bustling cosmopolitan hub. This has helped in stirring up its real estate market, which has become a major global office destination.

The inclusion of Bengaluru in the Smart City list - an ambitious Indian government project to enhance liveability in urban centres, is also expected to lead to improved infrastructure; providing smart solutions to bridge service delivery gaps and enable technology use. The firm believes this will further attract real estate investors to the city.

According to the report, Bengaluru has the cheapest office rentals to offer, followed by Gurugram on the second spot. The report further elaborates that the eastern Whitefield area in the eastern Bengaluru is the most affordable technology district in the world, with a current rent rate of $9.65 (Rs 632) per sq feet.

Coming to Gurugram, which is the only other Indian tech hub to have found a place on the list, the current office space rent rate in the area is $20.40 (Rs 1,335) per sq feet, according to the report by Knight Frank. It further elaborates that here the cost to the firm, for employing and accommodating 100 people comes to be around $1.3 million (Rs 8.27 crore approximately) annually, which is the lowest in the world. This makes the millennium city a lucrative option for tech firms starting up their operations in the country. On the other hand, the survey has placed Zurich, a Swiss city known as a hub of banking and finance, is the costliest on this front.

Globally, London is the costliest in office rental values at $90.75 (Rs 5,940) per sq feet.

Commenting on India’s performance on the list, Viral Desai, a senior official at Knight Frank India, spoke to Deccan Herald and said that India’s office market had witnessed a stellar run in 2016 as compared to the recent past. Desai believes that based on the report it can now be fairly accepted that India is home to some of the most affordable Central Business Districts in the world.

This development was first reported in Deccan Herald.

[Image: YourStory]