Why Bangalore's Office Rentals are Affordable in Asia Pacific

Bangalore : According to the data of property consultancy firm JLL India, Bangalore has the most affordable office rentals over top metro cities in India. One of the prime reasons why the Bangalore city has been able to invigorate entrepreneurship, which consecutively stimulating a vibrant startup ecosystem, has been the relatively affordable office space.

Prime rental localities come at around $1 (about Rs 60) per sq ft per month, which implies $12 per sq ft per month. Comparatively, prime rentals in Mumbai are around $ 70 per sq ft per annum, $55 per sq ft in Delhi and $18 in National Capital District (past Delhi). It means that Bangalore is the most affordable major office rental market even in Asia Pacific; Bangalore is the only city which offers affordable office rentals where as cities like Hong Kong commanding rental values of about $ 130 per sq ft per annum.

Last month, India’s biggest e-commerce company Flipkart has leased out around 3.25 million sq ft of office space on Outer Ring Road in the Embassy tech Village. The deal was closed at approximately Rs 52 per sq ft per month.

Alastair Hughes, CEO Asia Pacific at JLL said that “Office rentals in Bangalore city are exceptionally low. With a rental income yield of 10%, the capital value per sq ft makes the city exceptionally alluring”.

“You have international occupiers of rented office spaces, quality structures and a story for future development, which put together to makes the city appealing to global investors,” he added.

Hughes was in Bangalore to attend JLL’s Asia pacific biannual board meet, which was being held in India for the first time. According to industry estimates; Bangalore has approximately 100 million sq ft of rented office space, by far the biggest office lease market in India.

During the current year, the international investors (the likes of pension funds, PEs and sovereign funds) have put a record of $ 125 billion in buying commercial office spaces in the Asia Pacific region. India has only been able to draw $1.4 billion. Despite the fact that, India has close to 400 million sq ft of A-grade office space. In that 80 percent of that inventory is held through strata titles, a manifestation of ownership where each floor of a building is owned by multiple investors.

Anuj Puri, chairman and country head, JLL India avowed that “In India around 100 million sq ft of office space is possessed by top 18 office space developers. This inventory could potentially release $ 10 billion in value if it were recorded through a real estate investment trust; he added.

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