According to a report by the Confederation of Indian Industry and CBRE, India's IT hub, Bangalore, is expected to continue to lead the country's commercial real estate market with 330-340 million square feet of office stock by 2030.
The report, titled “Karnataka Outlook: A Journey for Real Estate Excellence in the South”, released in Bengaluru on July 10, highlighted that the city's office space is expected to double from 100 million square feet in 2013 to over 223 million square feet as of June 2024, accounting for the highest share of the sector among major Indian cities.
The report said India's total office space will be 880.7 million sq ft as of June 2024, of which Bengaluru will account for the largest share at 25 per cent. This translates to the city's average annual absorption of around 15-16 million sq ft over the past few years, the report added.
“Over the next few years, Bangalore is expected to witness significant growth in the surrounding areas. Coupled with the availability of large land parcels and multiple upcoming infrastructure development plans, the commercial sector is set to expand significantly in the North, East and South,” said Anshuman Magazine, chairman and CEO, India, Southeast Asia, Middle East and Africa, CBRE India.
Which sectors are driving demand?
Looking ahead to 2030, technology, engineering, manufacturing and BFSI sectors are expected to drive major demand for Bangalore's office market, with life sciences, aviation and automotive being the emerging sectors that will help drive demand.
Currently, the technology sector accounts for 30-35 per cent of the city's annual absorption, mainly in the Outer Ring Road and the commercial centre of Whitefield, according to the report.
The report also highlighted that Bangalore leads India's demand for Global Competency Centres (GCCs) with a 41% share between 2022 and June 2024. It attributes this feat to a combination of the Garden City's offerings, including a skilled talent pool, prime Grade A assets, and a well-developed IT ecosystem.
“Karnataka's vibrant tech infrastructure must continue to evolve to maintain its edge. Developing high-quality, sustainable tech space with state-of-the-art facilities will be key,” said Ram Chandnani, managing director, advisory and transaction services, CBRE India.
Shailendra Naidu, senior executive director, advisory and transaction services at CBRE, cited ease of doing business, high land costs and efficient space utilisation as long-term challenges for the market. “The methodology that most developers use to acquire land is through joint ventures. This model is likely to pose challenges going forward,” he said.
Entertainment, fashion and home goods drive demand in retail sector
According to the report, Bengaluru's retail real estate stock is expected to double from 7.2 million square feet in 2013 to more than 16 million square feet as of June 2024, accounting for the second-highest share at 24 percent among major Indian cities. This metric is further projected to increase to 20-30 million square feet by 2030, indicating a 1.4-fold growth, the report noted.
Absorption in Bengaluru's retail market is primarily driven by entertainment, fashion & apparel, and home & department stores, each accounting for around 20-30 per cent of the annual demand, the report said, adding that the average annual absorption for this sector stands at 1.5-2 million sq ft in the national capital.
Bengaluru is also well-positioned to be home to three of the 17 registered shopping malls in the country, according to the report.
This article was originally published in Hindustan Times on July 10, 2024.
Topics you may be interested in
Source link