Bengaluru has everything going right in its office market, said Gulam M. Zia, Executive Director, Research and Advisory, Knight Frank. He was speaking during the launch of Knight Frank’s half-yearly report, “India Real Estate Outlook”, that analysed the residential and office market performance of Bengaluru for July-December 2014.
“With a background of rentals being subdued all over the country and with Pune looking up after seeing two years of low rates, Bangalore comparatively seems to be heading for the best in 2015, as positive factors of driver industries will aid office growth even further,” added Mr. Gulam.
With office markets across top six cities showing a turnaround with a downward spiral since 2013, absorption rose by 14 per cent.
And Bengaluru vacancy levels having already touched 10 per cent as of December 2014, the city is expected to clock in a single-digit vacancy level in the next six months, according to Knight Frank findings.
“Apart from the momentum gained with IT/ITeS sectors being the backbone of the office market till 2013, the city saw a 13 per cent ingress from the BFSI contributing to the luxury growth of the sector,” said Satish B.N., Executive Director-South, Knight Frank. “The icing also seemed to be the 34 per cent of contribution from e-commerce in office occupancy, which turns out as a welcome change to the Bangalore office front. E-commerce has rescued the Bangalore office market as IT/ITeS has slipped to a low of 53 per cent in 2014 H2 occupancy from the earlier 71 per cent,” said Mr. Satish.
“Absorption in 2014 recorded a 9 per cent growth over 2013,”he said.
ResidentialThe general outlook for residential market sees a fall in prices and fall in new supply, with sale volume down by 3 per cent as 2014 clocked in a sale of 55,701 units, as against 57,306 units in 2013.
South Bangalore saw a severe decline in launches (8,000 units) with North Bangalore balancing it out with 11,000 units launched in H2 2014.
“The micro-market of the North was expected to improve when the super expressway was announced and land banks were in progress subsequently,” says Mr. Gulam.
Conversion factorIndustrial to residential conversions at Peenya and Bidadi too will give way to more residential developments, he says.
“Soon demand is likely to be concentrated around the North and South-east corridor – Outer Ring Road, Hebbal, Nagawara, Thanisandra, K.R. Puram, Marthahalli, Sarjapur Road – due to good connectivity and infrastructure,” says Mr. Satish.
12 per cent increaseHebbal in the North witnessed a 12 per cent increase, the highest price rise (Rs./sft. 5,000-9,500) backed by good infrastructure development plans.
While Langford Town was the highest in terms of its pricing, reaching an upper level of Rs./sft. 20,000, the closest to CBD demanded Rs./sft 22,000 to 30,000, with 10 per cent rise.
While Rajajinagar and Malleswaram in the West saw a 6 per cent increase, Whitefield in the East saw 11 per cent more, and Kanakapura Road and Tumkur Road had a 10 per cent growth due to Metro connectivity.
Unsold inventoryAlthough Bangalore saw 68,134 launches in 2014 with nearly 55,701 units absorption, the unsold inventory as of December 2104 stood at a total of 1,00,968 units (that includes under-construction units too for the last few years) and would require 21 months to exhaust, according to a report released by Knight Frank.
