Corporates in Bengaluru seem to be scaling up office space in anticipation of letting more of their employees work from office.
Consequently, the city’s office space leasing transactions in the first half of calendar 2023 was highest across top eight cities in the country at 7 million sq.ft, against 6.4 million Sq.ft in the corresponding period a year ago, reported realty advisory firm Knight Frank India on Tuesday.
The city accounted for 27% of the total 26.1 mn sq.ft transacted across NCR, Chennai, Mumbai, Hyderabad, Pune, Kolkata and Ahmedabad.
Buoyant during H1 2023
Bengaluru’s office sector remained buoyant during H1 2023, despite facing multiple headwinds such as volatility in the IT/ITeS sector, continuation in work-from-home policies and the funding crunch for startups, said Knight Frank.
According to the realty advisory firm, GCCs (global capability centres) and co-working occupiers drove the demand for office space during H1 2023, thus, balancing the slowdown arising from the IT/ITeS sector.
The demand for flex spaces was growing as companies, especially in the volatile IT/ITeS and start-up ecosystem, were opting to operate from co-working and managed offices as a revenue saving mechanism. In fact, sectoraly, the City’s commercial market leasing volume was largely dominated by flex working spaces (41%), Global Capacity Centres at (29%) and India facing and third-party IT services accounted for 15% each. Flex occupier leasing volume accounted to 2.9 million square feet during H1 2023, the highest level in the last ten half-yearly periods.
Although Bengaluru’s office market has been predominantly led by third party IT services, GCCs also held the potential to be significant drivers of the market, the study found.
Leading despite volatility
Shantanu Mazumder, Executive Director, Bengaluru, at Knight Frank India said, “Bengaluru continues to be the most popular market for office occupiers despite difficulties including volatility in the IT sector and work-from-home laws.’‘
The top commercial districts, ORR (outer ring road) and PBD ( Peripheral Business District ) East, were where the majority of office space was and the future demand for office space was anticipated to be supported by enterprises that decided to bring back their employees back to work, plus expansions activities of organisations with domestic focus, he added.
New completions for office space was recorded at 6.4mn sq ft, higher by 10.3% YoY from 5.8 mn sq ft in H1 2022.
Bengaluru, in the first half of the calendar, registered residential sales of 26,247 units, a modest 2% degrowth from the same period in 2022. The slowdown in sales was mostly caused by the depletion of ready-to-move inventory, which was unable to keep up with the expanding demand. With homebuyers favouring luxury lifestyle and bigger apartments, the share of sales in Rs 1 crore and above category grew from 10% in 2018 to 22% in H1 2023.
The City saw launches of 23,542 new residential units in H1 2023, an increase of 11% over the previous year, as per Knight Frank.
South Bengaluru maintained its dominance accounting for 39% of the city’s total home sales while East Bengaluru continued to gain traction forking out a sales share of 31%.
