E-commerce Giants is Changing the Face of Real Estate This Year

The popular E-commerce Giant, Flipkart engrossed more than 411,000 sq ft of real estate space for new office in Bangalore last year. In Indian Real estate, for the first time in five years, the leading e-commerce majors like Flipkart, Amazon, Jabong and Snap deal has crossed the absorption of millions of sq ft across major cities like Delhi-NCR, Bangalore and Hyderabad. With their fundraising, valuations and deals through last year, the major ecommerce giants made headlines in 2015 for absorbing big real estate. In fact; in order to create a niche burgeoning lifestyle segment in the country, snap deal absorbed over 115,000 sq ft of real estate space in Delhi. Jabong occupied a 120,000 sq ft in Gurgaon to provide its unique services to its customers.

Realty experts say that; “e-commerce majors had fired office leasing real estate market to thrust their ambitious growth plan in 2014 & if the current plans works out then, greater uptake will be able to see in Real estate market this year”. Flip kart’s Bangalore real estate deals spread over three million square feet, which is yet-to-be-signed & could be the biggest deal in 2015 for Flipkart. The other giants are likely to join the race to access the big real estate in 2015.  

As per the data available with Cushman and Wakefield; a leading real estate consultancy, Flipkart had topped the real estate list in 2014 with the absorption of three office properties in Bangalore spread over 411,000 sq ft. The e-tailer declined to divulge its real estate plans, however it is learnt that Flipkart - which is being headquartered by housing 10 offices in Bangalore and 13 warehouses across the country - is in the closing stage of signing a deal for its proposed campus, where all its workers will be accommodated.

By identifying Embassy Tech Village on Bangalore’s Outer Ring Road for its campus; in October 2014, the company has entered a "pre-commitment" with the Embassy group.  The campus is spread over 1.2 million sq ft, with an alternative for an added 1.8 million sq ft. According to consultants; the current property rental rate is pegged at around Rs 48 per sq ft per month, which translates Rs 14.4 crore a month rental value, or over Rs 170 crore a year. The on-site construction will take up to three years and the campus might be in place by 2017, when Flipkart turns 10.

Sachin Bansal, Chief Executive Officer reportedly told Business Standard that Flipkart be expecting to double its whole tech team by 12 to 18 months. The current employee strength was 33,000 and this will happen with business expansion.

On the other hand, Jabong and Snap Deal are also striving hard to expand their business as they made large office space transactions and are predicted to continue this year. Jabong took 120,000 sq ft of commercial real estate office space in Gurgaon and Snap deal took 115,000 sq ft in Delhi.  Praveen Sinha, Jabong CEO without disclosing the apparent real estate details says that, we are planning to take a new and larger rented office this year. The company with more than seven warehouses also has campus plans, but those are not abrupt. Kunal Bahl, Snap deal CEO said that the company has no ambitious real estate plans as it already has several offices in New Delhi's Okhla commercial locality.

Despite the fact that American e-commerce giant Amazon refused to discuss its real estate ambitious plan and it is accepted to be taking a gander at a vast office space of more than one million sq ft in Bangalore. Amazon spokesperson pointed that the company has its real estate features all around top 15 Indian cities including eight fulfillment centers equivalent to warehouses that offer a total storage capacity of over half a million square feet to retailers and small and medium businesses. We are growing at a faster pace and all can expect that our real estate plans to grow this year as well.

Estimates say that the warehouse space take ups may double to four million sq ft in 2015. Furthermore, the companies like Amazon, Snap Deal and Jabong, those like FabFurnish, UrbanLadder, Quikr and PepperFry are also looking for taking up more real estate to grow their business foot prints.

According to Cushman & Wakefield, real estate consultancy data, in 2014, the Grade-A office space absorption rate in Delhi NCR touched 567,499 sq ft in 2014 whereas 84,000 sq ft in the previous year. Last year, Bangalore city witnessed a rose in real estate absorption by e-commerce firms from 453,495 to 622,811. Hyderabad saw a real estate absorption growth from a 4100 sq ft to 8542 sq ft and Mumbai grew from no office space absorption to 27,000 sq ft, last year and Kolkata shows Real estate absorption of 4600 sq ft in 2014 from no absorption.

Despite growth shown in many cities, the total absorption rate of Grade A office localities by e-commerce companies went up marginally to 1.26 million sq ft in 2014 across eight cities. Chennai witnessed a drop of office space take up by e-commerce companies from 690,800 sq ft to 31.150 sq ft in 2014. The e-commerce real estate take up is still a small portion of the overall office pie in 2014. The total Grade A office space absorption across the eight major cities witnessed a rose from 22.2 million sq ft to 29.5 million sq ft last year. The prediction for 2015 is 36.8 million sq ft and 40.1 for 2016, as per data.