By Dominick Rodrigues/Arunkumar Rao
Bengaluru: Bengaluru retained its premier position as the city registering highest office leasing volume in the country by recording office leasing of 0.70 million square metres (7.54 mn sq ft) — which accounted for 34% of the overall volumes across the eight markets in India, according to a recent Knight Frank India flagship half-yearly report.
Shantanu Mazumder, Senior Branch Director, Bangalore, Knight Frank India, said, “Bengaluru has always been a premier commercial market and a hotspot of capital investment in the country. The pre-committed activity remained strong with 2.47 mn sq ft of space being taken up in Q4 2020, including large deals by ANI Technologies, Google and Amazon. Developers ensured quick deal closures in Q4 2020.”
“In particular Bengaluru has the benefit of existing low vacancies that will enable absorption of much of the upcoming supply. The city also has the advantage of relatively lower rentals than global markets, and a large talent pool should help in better than expected market revival as global economies move towards normalcy. Going forward, the city is expected to experience a rise in office rental values in 2021.”
“Standalone, Q4 2020 recorded 6.4 mn sq ft of gross transactions — which was far ahead against 1.15 mn sq ft in Q3 2020. The quarter also surpassed the cumulative performance of the first three quarters of 2020. In terms of new office completions, the city registered 5.42 mn sq ft of supply in H2 2020.
The city reported an exponential increase in the average deal size by 61% from 56,503 sq ft in H2 2019 to 90,890 sq ft in H2 2020.”
“With regards to the sectoral profile, the manufacturing industry doubled its demand share to 25% in H2 2020, compared to 12% in H2 2019. In terms of micro-market performance, Peripheral Business District – South (Electronic City and Bannerghatta Road) recorded a phenomenal growth of 347% YoY to 1.87 mn sq ft under office leasing in H2 2020.”
Mazumder said that while the pandemic and associated lockdown disturbances left an impression on 2020 performance of Bengaluru residential market, the city made a meaningful return in Q4 with a 32% QoQ improvement in home sales.
“As a direct result of the pandemic-related experiences, there is an improved consumer perception for owning bigger and better houses. In terms of income scales, the Information Technology sector largely maintained employees’ jobs and income compared to their pre-COVID level that lent further resilience to the city’s housing market during these uncertain times.”
“Multi-decade low home loan interest rate and relatively affordable price dynamics in the Bengaluru market have helped the cause of demand revival even during COVID crisis. Going forward, as pandemic resolution brings normalcy, low home loan interest rate and relatively affordable price dynamics will ensure a strong housing market in Bengaluru,” he added.
With gradual relaxation of the lockdown in Q3 2020 and better preparedness for the prolonged coronavirus outbreak, businesses — especially technology-driven enterprises — made a strong comeback and actively began scouting for office spaces in line with their long-term business plans. As a result, transaction activity picked-up meaningfully in Q3 2020, as compared to the lockdown-influenced previous quarter.
Q4 2020 standalone registered a massive growth of 459% QoQ to 6.4 mn sq ft of gross transactions. The quarter turned out to be much better than the same quarter last year and surpassed the cumulative performance of Q1 (4.19 mn sq ft), Q2 (0.58 mn sq ft), and Q3 ( 1.15 mn sq ft) in 2020, the report stated.
Bengaluru’s residential market recorded home sales of 11,402 units in H2 2020 and 23,576 units in the calendar year 2020. The city reported new launches of 9,123 home units in H2 2020 and 19,929 home units in 2020. South Bengaluru saw the highest quantum of homes sold in H2 2020 to 3,860 units followed by East Bengaluru with 3,750 units. South Bengaluru (Koramangala, Sarjapur Road, Jayanagar, JP Nagar, HSR Layout, Kanakapura Road, Bannerghatta Road) also registered maximum home launches to 3,740 units during the period.
With consumer preference shifting towards ‘ready-to-move’ houses, developers restrained new project launches in this year and reoriented operational and financial bandwidth towards completion of ongoing projects. The recurring spate of sales compared to launches has affected a gradual decline in the city’s inventory level. On an annual basis, unsold inventory is down 5% to 74,764 housing units at the end of 2020. In 2020, the weighted average house price was recorded at Rs 53,120/ sq m (Rs 4,935/sq ft), the report added.
