Office Space

Indian Cities Emerge as Most Affordable Office Hubs

India’s office market has come of age and has had an impressive run in 2016 and the first half of 2017. Home to some of the most affordable Central Business Districts in the world, Indian cities have outranked global business hubs. In a recent global survey, three Indian cities have been listed for highest yields for prime office space. Tech hub Bengaluru has secured the top position with the highest yield of 10 percent, followed by Gurugram at 9.2 percent and Mumbai at 8.5 percent.

Let’s take a look at what makes these cities tick:

Bengaluru: Bengaluru’s office market continues to go from strength to strength in the first half of 2017, crossing a transaction of 11.4 million square feet of office space. The nation’s IT capital has been ranked as the world’s most affordable technology hub. Bengaluru offers a significant advantage over other leading commercial hubs in the form of attractive rentals. This rental arbitrage is a strategic advantage for the city’s commercial market and continues to attract corporate interest. According to market intelligence, the Whitefield area in eastern Bengaluru with a rent of Rs. 632 per sq. ft. is among the world’s most affordable technology districts.

Gurugram: With its shiny buildings and vibrant economy, Gurugram is projected as the symbol for the new rising India and the Millennium City. Today, Gurugram is one of the India’s fastest growing districts, having expanded more than 70 percent over the last one decade and is now home to over a million people. Yet, the annual cost for employing and accommodating 100 people in Gurugram is estimated at Rs. 8.27 crore and is amongst the lowest in the world. Gurugram’s Cyber City is ranked 25th on the Tech Districts Index, outpacing Madrid’s Julian Camarillo area and Kuala Lumpur’s Cyberjaya Office Market in office rents.

Mumbai: The city’s commercial market has been traditionally dominated by the banking and financial services sector. That trend is changing as the financial capital has experienced diverse new leasing activity in this year with demand driven by companies in the logistics, media, fast-moving consumer goods (FMCG) sectors and law firms. Back office operations of a few banking and financial companies have recently moved to affordable hubs such as Navi Mumbai. These new leasing trends are giving rise to affordable micro markets such as Airoli and Navi Mumbai.

Going forward, commercial real estate (CRE) markets in Bengaluru, Gurugram, and Mumbai are likely to continue their stellar run. Infrastructure projects such as the Delhi – Mumbai Industrial Corridor (DMIC) are expected to further boost the CRE market by creating new business clusters. The listing of the first Real Estate Investment Trust (REIT) by the end of the year is likely to usher in a new phase of growth for commercial real estate and further boost commercial hubs across the country.

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