The city recorded 34% of overall volume of office space leased out in second half of 2020 across the eight major markets. By M.A. Siraj
Post-lockdown, Bengaluru has lived upt o its reputation of being the most resilient realty market with a 459% jump on QoQ basis, registering the most impressive bounceback across the eight large cities in India. According to the Knight Frank India report for the second half (H2-2020), the city retained its premier position recording 7.54 million square feet (mn.sq.ft) of leased office space which accounted for 34% of the overall volume across the eight largest markets in the country. Of the four quarters, Q4 (Oct.-Dec. 2020) alone accounted for 6.4 mn.sq.ft., from 1.15 mn.sq.ft. during the Q3. The Q4 performance surpassed the cumulative performance of the first three quarters of 2020. In terms of new office completions, the city registered 5.42 mn.sq.ft. of supply in H2-2020. It recorded 12.32 mn.sq.ft of gross leasing in 2020.
The report says there was exponential growth even in average deal sizes, from 56,503 sq.ft. in H2-2019 to around 91,000 sq. ft. in H2-2020. In terms of micro-market, Peripheral Business Districts of Electronics City and Bannerghatta Road recorded a phenomenal growth of 347% Year-on-Year (YoY) basis to 1.87 mn.sq.ft. of office space leased out during H2-2020.
According to Shantanu Mazumder, Senior Branch Director, Knight Frank, the residential market in the city registered a 41% jump in Q3 and 32% in Q4 of the year that is just past after a sharp drop in Q2, the period coinciding with the complete lockdown across the country. He attributed the sharp jump to pent-up demand. However the annual sales of housing units showed an overall 51% dip because of the pandemic.
Mr. Mazumder said the residential outlook for 2021 was positive as demand will continue to grow with construction pace inching back to pre-COVID rate. Bengaluru recorded sales of 11,402 units in H2-2020 whereas new launches recorded 9,123 units during the same period.
He pointed out that multi-decade-low home loan rate and relatively affordable price dynamics in Bengaluru have helped the cause of revival of demand even during the COVID-19 crisis. He expected the two factors to continue greater traction for home-buyers. The IT sector largely maintained employees’ jobs and income compared to the pre-COVID level which helpedin the city’s housing marketing during the uncertain times.
The report notes that residential prices, that were increasing at the start of 2020, have softened a bit and the city recorded a marginal drop of 1% YoY in weighted average prices during 2020. Similar softening trend was seen in terms of rents too in Q4 which were escalating at the commencement of the year. The weighted average rent was lower by 4% QoQ in Q4 and stable on an annual basis of ₹80 per sq. ft a month.
The IT industry maintained its top spot among the consumers of leased office spaces in the city with a 42% demand share in H2-2020 against 51% in H2-2019.
New office supply in the city in 2020 registered 9.42 mn.sq.ft whereas in H2-2020 it had recorded merely 5.42 mn.sq.ft. on YoY basis.
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