Further, on the retail front, Bengaluru’s brand penetration per capita is has increased as compared to other metro making it attractive for retailers to invest. Additionally, the city witnessed 57% increase in residential sales in Q1 2021 as compared to Q1 2020.
The commercial occupiers remain optimistic about the city’s growth and were able to leverage market conditions to negotiate competitive deals. There is also renewed demand for co-working spaces with flexibility emerging as an important priority amongst occupiers.
With key commitments ranging between 250,000 sq. ft to 600,000 sq. ft transacted by clients from a gamut of industry including tech giants, pharmaceuticals, research& development as well as some prominent start-up, Q1 saw a strong absorption of 1.9 million sq. ft.
A hybrid work model with both Work From Home (WFH) & Work From Office (WFO) was seen as a trend by many for the immediate future with several tech companies resuming office for 15-30% of workforce. However, the second wave of the pandemic forced occupiers to reset back to WFH for the foreseeable future.
Retail saw an encouraging first quarter with business recovery across high streets and malls averaging between 75-93%, but with cities clamping down again a significant impact is inevitable. Large take up’s for Q1 included Ikea (100,000 sq. ft in Whitefield).
On the positive side, India’s e-commerce market is set to increase significantly, and big brands are expected to rapidly expand to new markets across India by investing in digital solutions and infrastructure.
“Bangalore continues to be an attractive city for manufacturing especially EV companies like Tesla, Ather & OLA seeing to set up operations. Demand for warehousing spaces led by ecommerce and 3PL companies continue to fuel the city’s warehousing growth. In the short to medium term, sectors such as FMCG, e-commerce, pharmaceuticals, and cold storage continues to witness an increased growth and demand for additional warehousing spaces,” said Rahul Arora, Managing Director (Bengaluru), JLL India.
“The residential sector has seen a positive upsurge in demand with good movement in both luxury and premium segment housing. Home buyers are seeking good deals in completed & under construction projects due to attractive home loan rates which is also encouraging demand. However, there have been limited new launches with developers being cautious of creating oversupply in the market. Distressed Projects are also being taken up by new developers with a higher price point for new buyers,” he added.
Green shoots in Debt Finance Market have been observed with availability of project finance for the sector improving although the cost of borrowing for mid and smaller developers has increased. With more lenders now evaluating debt finance proposals, the cost of borrowing should normalize.
A renewed interest in Strata Ownership has been observed with new and emerging players entering this sector. With limited leased office assets available for sale, forward sales continues to be the preferred strategy for investors.