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Profissional Documentos
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Contents
06
08
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24
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28
30
04
Birth of a
Technology
Titan
Bangalore
Office
Market Key
Highlights
Emerging Trends
in Bangalores
Office Leasing
Markets
Intrinsic Strengths
that Drive Bangalore
as Indias Pivotal
Commercial Hub
Bangalores Leading
Office Nodes
Recommendations
for Occupiers and
Developers
Rebooting
Infrastructure
to Support the
Development Curve
Comparing
Corporate Hubs:
How do Bangalores
Office Hubs Stack up
against Each Other?
Market Outlook
City
Snapshot
Geographical spread
2,190 sq km
2015
88
87
62
Absorption activity
95
67
2015
9.6 mn
6.5 mn
2021(P)
*Source: Census of India 2011, Population Projection for Karnataka 2012 2021 by Directorate of Economics and Statistics, Bangalore, 2013.
vs
2,377,305
INR 9,200.
87%
Population
Density
(population
per sq km)
Urban
Population
No. of
Households
Highest
per capita
Income in
India
Literacy
Rate
Leading
Industry
Aerospace
and Aviation
Biotechnology
58%
of (33 out of 58)
CMM (Capability
Maturity Model) Level
5 companies in India
are established in
Bangalore
Manufacturing
vs
2011
(INR/sq.ft./Month)
Rental
leaders
108
95
250
270
295
295
Drivers
Good
Connectivity
Bus Network
Operational
Metro
CBRE RESEARCH
This report was prepared by the CBRE India Research Team, which forms part of CBRE Researcha network of preeminent researchers and consultants who collaborate to provide real estate market research, econometric forecasting and consulting solutions to real estate.
CBRE Ltd. 2016 Information contained herein, including projections, has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to
confirm independently its accuracy and completeness. This information is presented exclusively for use by CBRE clients and professionals and all rights to the material are reserved and cannot be reproduced without prior written permission of CBRE.
*The timeline are mentioned as per Calendar year beginning January to December
2011
Advantages
IT/ITES
(INR/sq.ft./Month)
90.9%
Supply addition
12
2015
4,384
2011
14.2 mn
2011
vs
127
Population Stats
2001
Key
Commercial
Hubs
Social
Infrastructure
Talent Pool
Birth of a
Technology
Titan
As Indias technology sector expands its horizons, Bangalore has emerged as a dominant
facilitating easy access to different nodes of the city, further
growth frontier offering the countrys new economy sectors such as information
stimulated office space demand in the city over the past few
technology, biotechnology, pharmaceuticals, manufacturing and other services sectors,
years. Persistent demand for office space from technology
a new growth paradigm. In the last two decades or so, Bangalore has transformed
firms spurred growth of commercial real estate market
from being a Pensioners Paradise to Indias Silicon Valley, becoming the hub of
in Bangalore, positioning it as one of the leading office
research and innovation. It started during the 1950s and 1960s, when Bangalore
destinations across the country. With completion of numerous
witnessed industrial transformation with the setting up of public sector enterprises
larger sized technology parks and special economic zones,
such as Hindustan Machine Tools (HMT) and Bharat Electronics Ltd. (BEL) and
Bangalores commercial office stock has grown exponentially
private sector enterprises such as MICO et al. During the early 1980s, the
from less than 20 million sq. ft. in early 2000s to 127 million
Karnataka State Electronics Development Corporation established an industrial
sq. ft. in 2015; a 13% (CAGR) growth over the last 15 years.
park known as Electronics City in the Southern outskirts of Bangalore. This was
This places the city well ahead of leading Indian office hubs
followed by the establishment of the Software Parks of India regime in the city
such as Delhi-NCR (National Capital Region) (90 million sq.
during the software boom in the 1990s, offering incentives to the still nascent
ft.), Mumbai (85 million sq. ft.) and other prominent Asian
IT industry to strengthen its base and evolve. Over the years, Bangalore
business hubs such as Singapore (56 million sq. ft.), Hong
witnessed the advent of its information technology sector with significant
Kong (73 million sq. ft.), Bangkok (13 million sq. ft.) and Kuala
investments flowing into the city mainly attributable to its intrinsic strengths
Lumpur (36 million sq. ft.).
such as a salubrious weather, pro-industry Government policies, presence
of prominent educational/science research institutions and abundant
skilled talent pool. The last factor being instrumental in attracting backIn recent times, flight to quality, rental arbitrage and availability
office operations and shared services platforms of global corporates into
of large scalability options have driven occupier interest
the city.
from the central locations of the city to more cost effective
commercial hubs in the suburban/peripheral areas of the city.
Consequently, in little over two decades, prominent corporates such
Marathahalli - Sarjapur Outer Ring Road (ORR), Whitefield, and
as CISCO, IBM, Microsoft, Cognizant, Sun Microsystems, Hewlett
peripheral locations of North Bangalore, have emerged as the
Packard, amongst others, have established a large footprint in
growth vectors for Bangalores commercial real estate market
the city; thereby driving the citys commercial office market. The
accounting for a dominant share of the citys commercial real
development of the International Tech Park in Western hub of
estate supply and absorption dynamics.
Whitefield in the late 90s, as a joint collaboration with the
Government of Singapore, further attracted prominent global
corporates such as SAP, Dell, Oracle, Shell, Aviva, GE, amongst
others.
Availability of good quality office spaces at affordable rentals,
presence of skilled manpower and improved connectivity
4|
CBRE RESEARCH
|5
Strengths
Asia's fastest growing
cosmopolitan city, marked with
characteristic architectural landmarks,
shopping centers and business
opportunities. It was critical in attracting
multiple industries, making it an ideal
gateway to India and beyond15.
Fast Facts
Real estate and commerce
The Silicon Valley of India is home to both domestic and global technology companies. ~
Bengaluru has about 950 IT firms out of an overall count of 2,400 in India1.
Hub of fast growing nano-technology, bio-engineering, aerospace, electronics-related firms in
India2.
Establishment of the Export Promotion Industrial Park (EPIP) Zone in 1996 and International
Technology Park Ltd. (ITPL) in 1998 at Whitefield3.
Availability of high quality commercial spaces offered by majority of prominent developers,
customized to the needs of IT companies4.
Affordable office rents due to constant addition of high quality supply over the years (owing to
the fact that Bangalore is a circular city and has grown in all directions, unlike say Mumbai,
which has space constraint or Hyderabad, which has grown only in one pocket)5.
Quality residential developments across the spectrum, with affordable projects from prominent
developers across the city6.
tructure
ing and infras
Physical plann
Bangalore Metropolitan Region is spread over an area of 8,005 sq. km., including
the Bengaluru Metropolitan Area that is divided into 5 Area Planning Zones (APZ)
and 6 Interstitial Zones (IZ)7.
Multiple infrastructure initiatives under development to enhance connectivity and
drive real estate growth across the city8.
Peripheral Ring Road (PRR) will circumnavigate the city beyond the ORR, connecting
all major highways and arterial roads9.
Metro Phase-I is partially operational, expected to become ready by Q4 2016,
followed by Phase-II by 202110.
Source:
1. NASSCOM, Regional News Letter- South- June 2012 | 2. CBRE Research | 3. Secondary research | 4.CBRE and secondary research
5. CBRE and secondary research | 6. Secondary research | 7. CBRE Research | 8. CBRE Research, secondary research | 9. CBRE Research, secondary research
10. CBRE Research, secondary research | 11. http://www.dnaindia.com/bangalore/report-bangalore-a-mall-too-many-1880092, https://en.wikipedia.org/wiki/
List_of_schools_in_Bangalore | 12. Indian Journal of research, Paripex Mredical Tourism in India. Jan 2014 | 13. Federation of Hotel & Restaurant Associations
of India (FHRAI), Indian Hotel Industry Survey 2013-2014 | 14. ASSOCHAM Job Trends Across Cities & Sectors survey, 2013-14 FY - http://www.daijiworld.com/news/
news_disp.asp?n_id=195135
16
17
Rebooting
Infrastructure
to Support the
Development
Curve
Purple Line Extension - East (Proposed)1
10
11
NICE Corridor
12
13
14
15
16
17
BIAL - Aerotropolis
12
10
R in
gR
oad
(O
RR
)
4
7
8|
19
Aerospace SEZ
19
er R
ut
ing
oa d
R
(O
11
11
18
CBRE RESEARCH
R)
11
(OR
R)
13
Out
er R
ing
Roa
d
ter
Ou
18
14
10
13
15
1. Extension to East Line (Baiyappanahalli to Whitefield) | 2. Extension to West Line (Mysore Road to Kengeri) | 3. Extension to North Line (Nagasandra to BIEC) | 4. Extension to
South Line (Puttenahalli to NICE Junction) | 5. Red Line (Nagawara to Gottigere) | 6. Yellow Line (RV Road interchange to Bommasandra)
LEGEND:
Airport Elevated Expressway
NICE corridor
|9
Namma Metro
The Bangalore Metro Rail project is aimed at connecting important hubs in the city through 32 stations
and two lines, with an estimated travel time of 33 minutes between terminal stations across the city.
Both phase I and II combined is expected to cover up all the major areas of the city to provide the much
required last mile connectivity.
Operational stretch:
Reach I Swami Vivekananda station, Trinity Circle, Ulsoor, Byappanahalli (operational since
October 2011).
Reach III Malleshwaram, Rajajinagar, Yeshwanthpur, Peenya (operational since March 2014).
Reach II Magadi Road, Vijayanagar, Mysore Road Terminal (operational since November 2015).
Under construction stretch:
Reach IV Jayanagar, R V Road Terminal, Puttenahalli (expected completion by Q4 2016.
Focus and impact on growth corridors: Areas including CMH Road (Indira Nagar), MG
Road, Malleshwaram, Ulsoor, Domlur, Byappanahalli, and others have witnessed residential capital
appreciation in the range of approximately 2030% since 2011. Going forward, the planned
development is expected to develop real estate and push up property prices across Yelahanka,
Hesarghatta, Puttenahalli, Jayanagar, Electronics City, BTM Layout and Nagavara.
10 |
CBRE RESEARCH
| 11
Bangalore
Office MarketKey Highlights
86
80
77
67
95
79
9.8
In mn sq ft
88
127
114
103
96
12.8
12.7
3.9
87
83
70
62
2015
Source: CBRE Research, Q4 2015.
2011
Source: CBRE Research, Q4 2015.
12 |
2012
2013
2014
2015
Delhi
Mumbai
Bangalore
2016
2017(E)
2018(E)
Existing
Pipline
Today, Bangalore leads other Indian office hubs in transaction activity and supply infusion,
accounting for a share of 33% of the entire development completion pipeline and
approximately 32% of total transaction activity in the leading cities during the first three
quarters of 2015. Moving ahead, Bangalore will continue to lead project completions with
a share of approximately 27% (~23 million sq. ft.) of the total supply pipeline lined up
in the leading cities till the end of 2017. Most of this pipeline will be concentrated in the
peripheral, decentralized hubs of the city, with the ORR constituting a share of approx.
31%, North Bangalore at 23% followed by PBD - Whitefield/Electronic City/others
at 21%.
Source:
23. In the 1990s and early 2000s, the Government allocated a large quantum of industrial land to developers for developing commercial office space. The land was allocated to developers (clear title land at
economical rates) with the condition to develop the area in a certain time period after land allocation. This led to constant and continuous addition of supply in Whitefield over the last 78 years, even when
demand was lower. Thus the Whitefield micro-market has noted continuous addition of supply with vacancy levels in the range of 4-7 million sq. ft., keeping rentals in check.
CBRE RESEARCH
| 13
Rental arbitrage
remains a key point of
interest for corporate
occupiers
Despite being a leader in transaction quantum
and office development activity, Bangalore also
offers a significant rental arbitrage as compared
to other leading office hubslargely as a
consequence of relatively lower land values and
subdued capital appreciation of land / assets
across various micro-markets in the city. Over
the years, moreover, ample commercial supply
availability in the city has kept commercial rents
under check across most micro-markets.
Grade A
Office Stock
Cost of
Living
IT/ ITeS
Presence
Talent
Pool
Social
Infrastructure
Physical
Infrastructure
Bangalore
Chennai
Hyderabad
Pune
Mumbai
Delhi NCR
Kolkata
Source: CBRE Research, Q4 2015.
As per an office occupier survey conducted by CBRE India in mid-2015, Bangalore scored the highest
among Indian cities, in terms of occupier's expansion strategies over the next two years:
CHART 4: OCCUPIERS PREFERENCE - EXPANSION STRATEGIES
Bangaluru
Mumbai
Gurgaon
Chennai
Hyderabad
Delhi
Pune
Noida
Kolkata
Ahmedabad
0%
5%
10%
15%
20%
25%
30%
% Share
Source: CBRE Research, Q4 2015.
Note: Location Preference of Corporates looking for expansion among Tier I cities in India, over the next two years
14 |
CBRE RESEARCH
| 15
Airport Elevated
Expressway
Tumkur Road
HEBBAL
NH4-Chennai
NH4-Pune
Operational Roads
Operational Metro Line
NBD
16 |
CBRE RESEARCH
NH-7-Hosur Road
Mysore Road
CBD
Sarjapur Road
ELECTRONICS CITY
EBD
SBD
ORR
PDB
| 17
10%
8%
0.4
6%
4%
0.2
6%
5%
In mn sq. ft.
In mn sq. ft.
0.6
4%
3%
2%
0%
2%
0
1%
0%
2011
2012
2013
2014
Supply
2011
2015
Absorption
Vacancy %
2012
2013
2014
2015
Supply
85
108
95
75
95
INR/sq ft/month
85
2012
2013
70
70
70
2012
2013
2014
INR/sq ft/month
90
2014
2015
2011
2015
Market Dynamics
Market Dynamics
What Works? Centralized location; excellent connectivity; superior image and profile; proximity to
retail and residential hubs; well-developed physical and social infrastructure.
What Works? Proximity to the city center; quality infrastructure; relatively higher availability of Grade
A space with larger floor plates; proximity to residential catchments and social infrastructure; presence of
select large-sized tech parks and small to medium sized commercial developments.
What Doesnt? Limited availability of Grade A space, restricting scope for expansion or large-sized
leasing; lack of developable land parcels; relatively higher asset pricing expectations by developers for
select developments.
What Doesnt? Relatively higher asset pricing vis--vis peripheral locations; limited options for
further expansions.
Where is the Focus? Small sized transactions in second generation spaces or select Grade A
developments; a sizable part of the overall vacancy is attributable to older Grade B developments.
Where is the Focus? Small to medium sized transactions in mostly second generation spaces vacated
previously by prominent technology firms relocating to the Outer Ring Road (ORR).
Recent Trends: Mostly small-sized space take-up by technology and banking firms; select occupiers
looking at second generation spaces vacated by prominent technology firms relocating to peripheral
locations, as well as vacant Grade B spaces; rental appreciation in relatively newer office developments,
despite tapered growth in recent quarters; instances of ground and mezzanine floors being leased out
for retail outlets.
Recent Trends: As vacancy levels deplete in the ORR, select occupiers have returned to this micromarket, aiding transaction activity. Rental values across prominent developments are on an upward
trajectory, appreciating by 6-7% q-o-q and by nearly 21-22% y-o-y in Q3 2015. An infusion of
approximately 1.6 million sq. ft. of IT space by the end of 2016 is likely to generate significant occupier
interest and trigger transaction activity. On the back of strong occupier demand, rental values are likely
to appreciate further in the short to medium term.
18 |
Vacancy %
2011
Absorption
CBRE RESEARCH
| 19
0.8
0.6
8%
20%
6%
15%
10%
2%
5%
0%
4%
0.4
0.2
0
2011
2012
2013
2014
2015
Supply
In mn sq. ft.
In mn sq. ft.
1.0
0%
2011
Absorption
Vacancy %
2012
2013
2014
2015
Supply
46
45
64
45
55
INR/sq ft/month
45
INR/sq ft/month
Vacancy %
44
2011
Absorption
2012
2013
2014
2015
48
48
2011
2012
50
2013
2014
2015
Market Dynamics
Market Dynamics
What Works? Proximity to prominent residential catchments in the South, ample social infrastructure;
typically commands lower office rents in comparison to the more established and centrally located
micro-markets in the city.
What Works? vailability of quality office space with large-sized floor plates; proximity to the CBD and
major residential catchments; access to a large talent pool; availability of contiguous developable land
parcels providing scalability options to corporates; improved connectivity to the airport; infrastructure upgradation to turn the ORR into signal-free corridor; large-scale completed SEZ supply integrated park
type environment with amenities such as food courts, crches, hotels, etc; relatively competitive asset
pricing vis--vis central and secondary locations of the city.
What Doesnt? Limited space options for occupiers and absence of quality supply addition in
near future; narrow roads leading to high traffic congestion; construction of MRTS adding to traffic
congestion.
Recent Trends: Transaction activity remained dormant in recent times; select leasing from technology
firms for small to medium sized back-office requirements; while select occupiers are evaluating
relocation to peripheral areas due to rental differential and congestion caused by ongoing metro
construction. Rental growth remained muted in recent times, weakest among all micro-markets.
Top Sectors: Technology, E-commerce
What Doesnt? Limited space available in completed developments in the last 1-1.5 years, especially
for sizes higher than 100,000 sq. ft.; as developers increasingly focus on build-to-suit (BTS) projects, an
artificial rental growth remains maintained (due to limited addition of speculative spaces), which might
disrupt the rental arbitrage offered by this micro-market vis--vis other prime locations such as the CBD
and EBD; increasing traffic woes on account of large employee population in all these parks.
Where is the Focus? Medium to large sized transactions for consolidation-cum-expansion initiatives
in tech parks, SEZ developments; active pre-commitment of under-construction space, especially new
phases of existing well leased office projects; BTS remains a preferred option as well.
Recent Trends: ORR continues to dominate commercial office leasing in the city, accounting for a
major share (more than 50%) of the leasing activity in the past four quarters. It offers scope for further
expansion/ consolidation and a number of corporate firms have chosen BTS space options apart from
upcoming under construction projects.
Top Sectors: Technology, E-commerce, Banking/Financial Services, Engineering/Manufacturing,
Pharmaceuticals/Healthcare/Biotechnology
20 |
CBRE RESEARCH
| 21
50%
40%
30%
20%
In mn sq. ft.
In mn sq. ft.
2012
2013
2014
10%
5%
0%
2011
2015
Supply
15%
2
0%
2011
20%
10%
25%
Absorption
Vacancy %
2012
2013
2014
2015
Supply
58
30
30
2011
2012
2013
53
48
INR/sq ft/month
30
55
54
32
INR/sq ft/month
Vacancy %
2014
2015
2011
2012
2013
2014
2015
Market Dynamics
Market Dynamics
What Works? Relatively lower rentals, quality developments with larger formats as well as the
presence of newer residential catchments and developing social infrastructure. Rental values in the
peripheral business districts of Whitefield and Electronic City are typically lower than other Bangalore
micro-markets and other leading cities such as Delhi and Mumbai. The two micro-markets are attractive
for firms seeking large spaces at comparatively lower rentals, since they offer tenants significant scope
for expansion due to availability of sufficient scalability options.
What Works? A new location offering a sizable supply pipeline (although mostly planned) along with
advantages such as proximity to the international airport, good connectivity with the city center and a
superior infrastructure base. On account of presence of Airport in the Northern periphery, government
has undertaken various infradtructure initiatives to improve connectivity of the location by developing
wide roads, signal free corridors, etc. Currently, numerous mid-sized commercial offices projects are
under construction/under planning stage in Hebbal and Yelahanka. SEZ developments on Hennur Road
and Bellary Road are likely to propel the growth of this suburb as a key office market.
What Doesnt? Distance from the city center, poor connectivity and significant (physical) infrastructure
issues have pushed demand towards the ORR and North Bangalore; on-going metro work and other
infrastructure projects might add to the already existing traffic congestion. Electronic City specifically
suffers from lack of quality residential catchment, social infrastructure as well as distance from the
international airport; factors that have deterred office occupiers from entering this region in recent times,
leading to rental stagnation.
What Doesnt? As the micro-market is a newer growth vector, majority of the existing employee
catchments are located in South / East/ South-east Bangalore, thus there is significant resistance from
employees to travel to NBD for work. This has led to corporates deferring their decision to move to
North Bangalore. The Area also Lacks completed residential supply; social infrastructure in terms of
retail, recreational options, limited healthcare options and intermittent power supply and limited water
availability;
Where is the Focus? Medium and larger-sized spaces, primarily driven by consolidation and
expansion requirements of prominent technology firms; pre-commitment in few under-construction
developments.
Where is the Focus? Medium to large format spaces in recently completed or under-construction
projects nearing completion.
Recent Trends: Has been witnessing steady demand, however, continuous supply infusion over the
past few quarters has resulted in higher vacancy levels, currently estimated at approximately 30%. The
region witnessed strong occupier demand during the year.
Recent Trends: Office space take-up rose significantly during the third quarter, largely led by the IT
sector. This area also saw pre-commitments in select under-construction properties nearing completion.
Areas such as Bellary Road, Hebbal and Nagavara, noted most project completions during the review
period. Offers significant potential for demand generation due to the sizable supply lined up in
2-3 years.
22 |
Absorption
CBRE RESEARCH
| 23
Comparing
Corporate Hubs
The matrix below compares the prominent office micro-markets in the city along real estate indicators
such as availability of quality space, pipeline strength, pricing, infrastructure strength and connectivity,
among others.
It is clear from the analysis below that the central locations of the city, namely the CBD, EBD and South
Bangalore, outclass the citys peripheral locations in terms of infrastructure availability. However, despite
this perceptible advantage, the Outer Ring Road stretch has clearly emerged as a preferred destination
for prominent corporate occupiers to enter and expand their footprint in the city, largely accentuated by
the availability of high quality office space, upcoming infrastructure, better connectivity and the sizable
supply pipeline for the next 23 years. The ORR is followed by the peripheral districts of Whitefield /
Electronic City and North Bangalore in terms of their ability to offer large sized spaces for facilitating
expansion / consolidation activities of corporate firms. Currently the ORR also offers the highest
concentration of SEZ stock across all micro-markets in the city.
Parameter
CBD
EBD
South
Bangalore
ORR
PBD
North
Bangalore
However, while measuring potential for future growth, North Bangalore leads other micro-markets,
owing to its proximity to the International Airport, better transportation network and a number of
infrastructure initiatives undertaken by the Government (such as the Information Technology Investment
Region, International Finance Centre, Hardware Park and Aerospace Park). Large scale availability
of developable land parcels offers the micro-market a significant potential for stimulating future
development activity.
24 |
CBRE RESEARCH
Emerging Trends
in Bangalores
Office Leasing
Markets
Increased focus on BTS developments
To reduce speculative risks associated with developing multi-tenanted buildings, developers are
increasingly focusing on developing Built-to-Suit (BTS) spaces with pre-determined specifications. From
an occupier perspective, BTS is an attractive proposition. Most corporate firms in Bangalore are seen
committing to large scale floor plate spaces. Consequently, they prefer campus style alternatives where
the design is customized as per their unique space needsprojecting the firms image, maximizing
location choices, improving space efficiency and incorporating latest construction materials and
technology. Moreover, any speculative office space supply entering the market remains limited, providing
greater control over rental values. This is particularly true in the case of Bangalores ORR, where low
vacancy levels and limited multi-tenanted building supply, together with most of the pipeline being BTS,
has already seen pre-commitments from various occupiers. This exercise is also prevalent in some of
the large tech parks in North Bangalore. Of the entire office stock in Bangalore, approximately 30%
comprises BTS developments.
| 25
As the commercial office market continues to strengthen, corporate firms (particularly those from
technology sectors, including start-ups) have started to view Bangalore as a long-term office space
destination. Hedging against a sustained appreciation in asset pricing, an increasing number of firms
have been opting to purchase office space as against leasing space. Apart from creating a possible
buffer against rising capital values, companies have also discovered that the practice of purchasing
office space is not only more cost effective in the long run, but also beneficial in building a significant
asset pool. Bangalore, which offers high-quality office space at comparatively lower capital values
(refer to the City Snapshot section of this report), also offers a significant scope for expansion and
consolidation. Consequently, corporate firms such as Adobe, Scandisk, Honeywell and IMS Healthcare,
among others, have purchased space in the prominent office developments of Prestige Tech Park,
Embassy Tech Square, Prestige Tech Platina, and RMZ Ecoworld. Furthermore, since most of these
purchase transactions are for the end-users customized space needs (in either under-construction
or planned projects), yields are relatively lower and hover in a range of 89.5%. For investment
transactions involving institutional investors, however, office yields are in a range of 1010.5%.
Bangalore's commercial realty market originated from the central locations of the city, and expanded
into the secondary and peripheral locations in South, South-East and East Bangalore. However, with
the establishment of a prominent tech park, ample availability of developable land, low capital value
of property and proximity to the international airport, Bangalore North has become the focus of
prominent corporates looking for expansion in the city in the medium to long term. The initiation of
a few infrastructure projectssuch as the elevated expressway, the proposed high-speed rail link, the
Metro line, and the planned Peripheral Ring Road (PRR), access to Devanahalli and the international
airportare likely to improve connectivity and further enhance the demand for commercial space in
North Bangalore. In addition, government initiatives such as the Information Technology Investment
Region (ITIR), the International Finance Centre, the Hardware Park and Aerospace Park are likely to add
to the infrastructure rejuvenation of this micro-market in forthcoming years. Furthermore, the operational
Hebbal FlyoverAirport stretch has already contributed greatly to the growth of office demand in the
region.
Additionally, as supply saturates in the ORR and other prime locations of the city, and as the rental
arbitrage enjoyed by Bangalores prime office hubs reduces, occupiers will increasingly turn their focus
to the relatively cost-effective North (further North beyond ORR). The year 2015 already appears to be
a threshold in this micro-markets evolution as a growth centers for the citys commercial market. North
Bangalore's overall share in the city's development completions has grown from merely 13% during
2011-14, to more than 30% in 2015. Moreover, a sizable supply pipeline of approximately 55.5
million sq. ft. of SEZ/Non-SEZ space is likely to be infused into the micro-market in the next two years.
North Bangalore has also witnessed frenetic residential activity in recent times with a steady stream of
new projects being launched by most prominent developers (Brigade, RMZ, Godrej, Embassy, Prestige,
Purvankara, Sobha, Bhartiya, Karle, et al.), which has been complemented by a healthy off-take from
investors as well as end-users. Availability of land parcels along the Thanisandra, Hennur Road and
Horamavu belts are likely to facilitate commencement of new projects and help maintain healthy supply
dynamics in the micro-market, while expansion in the IT sector will keep feeding the supply in the short to
medium term. Keeping in mind the steady pace of commercial and residential growth, North Bangalore
appears to offer the trajectory towards which Bangalores urban growth is expected to expand. It is
expected that by 201719, the completion of most infrastructure projects, tech parks and growth in
social infrastructure are likely to significantly shift Bangalores office activity towards this micro-market.
26 |
CBRE RESEARCH
| 27
occupiers
28 |
CBRE RESEARCH
dEVELOPERS
| 29
Outlook
Buoyed by improved economic sentiments, steady
occupier interest, an improving infrastructure
base, and its intrinsic strengths as a pioneering
hub for technology, research, development and
shared services platformsBangalore is likely to
maintain its leadership position in the countrys
corporate real estate market in the medium to
long term. It will continue to offer technology
firms and allied sectors a stable business
environment and access to a large, skilled labor
pool. Consequently, while technology sectors and
back-office operations will continue to remain
its principle demand drivers for commercial
office space, increasingly, new sectors such as
manufacturing, e-commerce, online start-up
ventures and biotechnology will also eventually
contribute to building the citys commercial
realty skyline. The role of policy schemessuch
as Digital India, Skill Indiaand the booming
e-Commerce sector may not be stressed enough
in this context. These will also play a positive role
in supporting the long-term expansion of the
citys commercial office sector.
Presently occupiers remain focused on Whitefield
and the ORR stretch between Marathalli and
Sarjapur Road; going forward, an incremental
shift towards newer locations such as North
Bangalore is expected. This is mainly owing to
factors such as attractive lease rentals, improving
social / physical infrastructure and residential
developments in the vicinity of the office clusters.
Henceforth, owing to inordinate delay in
infrastructural developments across the growth
corridors, most developments along the ORR
and PBD would continue to witness corrections
in the projected pipeline supply. This is expected
to keep office occupier demand under pressure
in the short and medium term. However, a
point of caution would be the sizeable office
development pipeline spread across most micromarkets, particularly North Bangalore, and the
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CBRE RESEARCH
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CIN - U74140DL1999PTC100244