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Bengaluru

The Garden City

Bangalore is known as the "Silicon Valley of India" (or "IT capital of India") because of its role as the nation's leading information technology (IT) exporter. A demographically diverse city, Bangalore is the second fastest-growing major metropolis in India. Bangalore is known for its pleasant climate throughout the year. Its elevation is the highest among the major large cities of India.

Sunny
16.6° C

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BANGALORE’S LANDMARK - VIDHANA SOUDHA
BANGALORE’S LANDMARK - VIDHANA SOUDHA
BANGALORE’S LANDMARK - VIDHANA SOUDHA

Bengaluru, the IT capital of India is one of the world's top destinations for multinational corporations operating in the IT/ITES space to set up a base for their Indian operations. In the last few years, Bengaluru has seen strong growth in the office space front with burgeoning demand for world-class business parks and office spaces.

Economy

India's GDP growth for the third quarter of FY2015–16 slowed down to 7.3% from 7.7% in the previous quarter. Growth in the construction sector was witnessed at 4.0% during the third quarter, up from the 1.2% growth in the previous quarter. The government, in its Union Budget 2016–17, exempted the Dividend Distribution Tax (DDT) for Special Purpose Vehicles (SPVs) of Real Estate Investment Trusts (REITs), which will make REITs more attractive in the real estate sector. The Parliament recently passed the Real Estate (Regulation and Development) Bill 2015, which is expected to create a uniform regulatory environment and bring transparency to the sector, thereby giving a boost to investments into the sector.

Economy

Demand remained buoyant, increase in new supply.

Due to 2.1 million square feet (msf) of pre-commitments that were absorbed, the first quarter of 2016 recorded a 87% growth in Grade A net absorption which is noted at 3.3 msf. The Outer Ring Road was the most active submarket, accounting for 77% of the Grade A net absorption during the quarter. The Grade A office supply continued to surge as the quarter witnessed 3.8 msf of new completions, recording a 160% increase. About 65% of this new supply was located in Outer Ring Road and the remaining in Peripheral North. The new supply was almost equally split between Information Technology-Special Economic Zones (IT-SEZ) (52%) and commercial developments (48%).

With net absorption being significantly higher than new supply, the overall Grade A vacancy rate further declined to 7.65%, a decline of 0.60 percentage point from the previous quarter. Due to low vacancy rates and high demand, the overall Grade A weighted average rental values surged by 4%. The submarket of Outer Ring Road that accounts for almost half of the inventory was the key driver of the rents during the quarter.

outlook

The net absorption is expected to further increase during the next quarter as 2.2 msfof pre-commitments are due for absorption. The new supply is also expected to increase as about 3–4 msfof supply is likely to become operational during the next quarter. Greater demand and limited availability can keep an upward pressure on rents in the next quarter.

QUICK FACTS ABOUT

  • Current Population11.5 MN
  • Metro & AirportsCONNECTIVITY
  • InternationalHEALTHCARE
  • Per Captia income$5,051
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