When we talk about offices it is still the IT/ITes sector, which is in the forefront of purchasing office spaces. The high demand for office spaces is driven by them. Bangalore is one of India's first technology centers. It is one of the technologically rich cities globally and ranks No. 12 in the world. The economy and the real estate sector have grown substantially because the tech majors have also taken an interest in this field. Innovation in technology and hi-tech startups are some of the main reasons why Bangalore is leading. It has a good depth of venture capital funding as well.
Investments in infrastructure, such as, the Bangalore Metro and the bus rapid transport system on the outer ring road combined with the increase in Foreign Direct Investment projects makes Bangalore one of the fastest growing major cities in the world. Interestingly Bangalore has surpassed some Asia Pacific cities in demand for office spaces. Strong demand for commercial space from the IT sector and associated IT-enabled services is helping absorption levels, which is highest in Asia Pacific Region.
Construction is also increasing rapidly to stay in track with the demand for office spaces and the growing economy of Bangalore. Office rents are also increasing steadily.
According to market statistics, Bangalore has continuously remained very near the demand-supply equilibrium in commercial real estate. As far as office sub markets are concerned companies like the Banking, financial, Insurance and eCommerce sectors prefer the eastern and northern areas of ORR due to good connectivity and a lack of supply in other sub-markets.
The new demand for office space in Bangalore is driven by JDA Software Company, Investment group from Paris, AXA, Tesco and the Carlyle Group. These companies are looking some huge space in the Sarjapur-Marathahalli area and Whitefield. Connectivity in the South and South East Bangalore sectors are found to be very good when compared with other areas and hence the interest in this area. The main reason for this increase in demand for space is also because of the growing economy and increase in jobs. The projection of office space supply for the next five years is predicted to be 31 million square feet of space in Bangalore. All this is due to the result of projects offered by many US and European companies which requires expansion. In the coming years, Bangalore will be having the least demand and supply gap because of regular supply additions and inclusion levels.
According to popular research on Real Estate Growth in Bangalore, it has been touted that Bangalore would still continue to be largest contributor in office space demand. Occupiers have great confidence about the rise in the growth drive in the near future. All these factors add up to the belief that in future there will be a positive influence on the quality of office buildings.Corporates have again started hiring, improving growth and consolidation; therefore deals for leasing office spaces are on the rise.
The main reasons behind Bangalore being the hub of such real estate activity could be attributed to more balanced commercial property values and great investment-grade office space.