SOUTHERN CITIES PROMISING COMMERCIAL REALTY

BY Realty Plus

Ramesh Nair, CEO, India and MD Market Development Asia, Colliers leading the conversation stated, “With corporate occupiers now having cautious yet positive approach, have begun hiring and taking up office spaces. This has led to bouncing back of India's office market though gradually, especially as seen in Southern cities that are hub of IT and IT enabled Services sector.”

Amit Grover, Executive Director, Business, DLF Ltd shared his views, “Covid has brought more growth to the tech world leading to more hiring. Also, one of the reason for attrition seen in companies has been the extended work from home, creating disconnect among employees in terms of culture and the bonding. This, hybrid format is gaining momentum more so, in IT world and workforce has started returning, from the last two months which will continue to increase by five to six percent going forward. There is also a growing confidence among occupiers of health and safety parameters being adopted by the office spaces developers & operators.”

Ravi Ahuja, Head Commercial Leasing, L&T Realty added, “In 12 to 24 months’ time we may see normalcy and I can compare 2020-21 with 2008-09 financial crisis. The demand for office space is being run by technology companies and peripheral office locations will continue to garner traction as occupiers will look to adopt a hub and spoke model for ease of employees. We hope to touch the pre-covid leasing levels in 2023.”

Vinod Rohira, CEO, MIndspace Business Parks, REIT speaking from the investment perspective said, “Leasing activity in Bengaluru and Hyderabad was led by the completion of buildings that had  prior pre-commitments. Even during the pandemic the global investors were clear about their long term footprint in India. Moreover, REITs in commercial real estate consistently performed well in 2020 and 2021 as it is not a speculative play. REIT is 80 to 90 percent of sustained earnings that are already coming out of developed assets.”

FLEXI SPACES REDEFINING OFFICES

Most of the flexible office players have witnessed a sharp recovery in 2021. Elaborating on the reasons, Amit Ramani, Founder and CEO, Awfis Space Solutions stated, “In the last two years more than 60 percent leasing in seven metro cities was in flexi office space segment. Almost 50 percent demand came from large enterprises and 40 percent from SMEs, start-ups and mid-size corporates. According to the report from Colliers in Q3 Chennai, Hyderabad and Bengaluru were driving flexi office space leasing led by IT, ITeS and BFSI companies. At Awfis, we are doubling our 60,000 seats capacity in the South cities in next 12 months. Bengaluru CBD is seeing the resurgence given, in the last one month 1.2 Million square feet was taken up.”

Juggy Marwaha, CEO, Prestige Office Ventures said, “We are gearing up to rebuild our office portfolio over the next 5-7 years, which will be a mix of both stand-alone buildings (400,000-500,000 sq. ft) and office parks. The projects are well-timed and will come into the market by 2022- end across Mumbai, Pune, Delhi, Kochi, Hyderabad and Bengaluru. Considering the evolving occupiers needs in the wake of the pandemic, we are also bullish on the co-working model and have added 12 centres to our portfolio pan India.”

THE DEMAND DRIVERS

According to Juggy Marwaha, the key demand drivers for office spaces are 35 percent domestic unicorns, IT and BPO form another 30-35 percent and 15-17 percent is in flex workspace segment. Amit Grover stated occupier’s changing preference for fully fitted spaces to save the capex on fit-out costs and to have the flexibility to increase or decrease the space over a period of time. Large mix used developments with amenities are what large IT and corporate companies are now looking at and the trend for well-equipped campuses will continue to grow, said Ravi Ahuja.

As per Amit Ramani, most companies are opting for managed offices that provide fit outs and services to support their business activities and the developers and flexi- space operators too are coming up with innovative business solutions to offer greater flexibility to their clients. Ramesh Nair sharing his outlook stated, “We can expect leasing activity to pick up further by 25-30% in coming year led by Bengaluru, Hyderabad and NCR. Tech, healthcare, e-commerce, followed by IT-BPO and BFSI companies will be the main occupiers.”

Return to work is not universal. Different cities and industry segments are showing different trends.

Tags : Ramesh Nair CEO India and MD Market Development Asia Colliers Amit Grover Executive Director Business DLF Ltd Ravi Ahuja Head Commercial Leasing L&T Realty Vinod Rohira CEO MIndspace Business Parks REIT Amit Ramani Founder and CEO Awfis Space Solutions Juggy Marwaha CEO Prestige Office Ventures. Chennai Hyderabad and Bengaluru