In the face of global challenges, Bengaluru’s commercial real estate market showcased remarkable resilience and growth throughout 2023. Despite geopolitical tensions and economic uncertainties, the city experienced a surge in activity, particularly in the office sector.
Recovery in Office Sector:
By the end of Q2 2023, the commercial real estate landscape in Bengaluru witnessed a significant rebound. Leasing transactions gained momentum, leading to fresh inventories and a noteworthy net absorption of 26 million square feet from January to September 2023, constituting 68 percent of the full-year figure in 2022.
Key Transactions:
1. Morgan Stanley Renews Lease:
– Morgan Stanley renewed its lease for 1.36 lakh sq ft office space at Ecoworld on Outer Ring Road, Sarjapur.
– The property, part of a special economic zone, reflects the city’s strategic real estate significance.
– Notably, this deal occurred amid Alphabet’s job cuts, underscoring confidence in Bengaluru’s market.
2. Qualcomm India’s Nine-Year Lease:
– Bengaluru-based Bagmane Developers secured a nine-year lease with Qualcomm India for 6.21 lakh sq ft at Bagmane Capital-Ankor.
– Commencing in April 2024, the deal encompasses ground plus 12 floors, emphasizing long-term commitment.
3. Amazon Development Centre’s Expansion:
– Constellation Business Park-Taurus II, developed by Bagmane Developers, welcomed Amazon Development Centre’s lease for 6.6 lakh sq ft.
– The phased rental structure, reflecting growth projections, spans from April 2022 to April 2027.
4. Mercedes-Benz R&D’s Lease Renewal:
– Mercedes-Benz R&D renewed its lease for 5.42 lakh sq ft at Embassy Crest building in Whitefield for five years.
– The commitment underscores the automotive giant’s confidence in Bengaluru’s commercial landscape.
Outlook for 2024:
Industry experts predict that India, especially Bengaluru, will remain a preferred emerging region in the Asia Pacific. The positive trajectory is attributed to rapid growth, competitive pricing, favorable valuations, and attractive yields. Global Capability Centres (GCCs) are expected to resume real estate decisions in India, with the country retaining its appeal due to a skilled talent pool, affordable office rentals, and supportive legal frameworks.
Developers’ Commitment:
Bengaluru-based developers, including Vaishnavi Group, express their commitment to expanding commercial footprints in 2024. Vaishnavi Group aims to add over 4 million sq ft of office space while continuing an aggressive expansion of housing projects in the city.
Supply Projections:
Experts anticipate office supply completions across India’s top seven cities to reach 165 million sq ft between 2023 and 2025, with Bengaluru leading the pack with a 29 percent share.
Top Transaction Highlight:
Google’s impressive leasing activity, surpassing 29 lakh sq ft across six deals, took center stage in Bengaluru in 2023. Notably, five transactions involved Google India Private Ltd and Google Connect Services India partnering with Bagmane Developers, with the sixth deal involving managed workplace provider Table Space.
In conclusion, Bengaluru’s commercial real estate market not only weathered global headwinds but emerged stronger, attracting significant investments and reaffirming its position as a key player in the dynamic real estate landscape.