With average rentals less than one dollar throughout the last decade, Electronic City continues to be an affordable choice for cost-conscious occupiers operating on a ‘$1 real estate cost strategy’. With average rentals being within a dollar, this micro-market offers cost-effective rental arbitrage over key localities such as Koramangala, Outer Ring Road (ORR), Whitefield and Hebbal- according to the latest report titled – Dollar-Edge Rental Office Markets in India, by Savills India, a global property consultancy firm.
The rental price in premium office buildings is one key parameter which has a positive co-relation with the overall affordability of the market. Electronic City has remained an office market with average rentals within one dollar throughout the last decade and continues to remain so, while other key localities such as Koramangala, Whitefield, ORR and Hebbal no longer offer the cost arbitrage advantage.
Post-the pandemic-induced slowdown, the leasing activity is expected to pick up from the momentum evident in last quarter of 2021 and rebound visibly in 2022 and 2023. In fact, the micro-market registered around 0.2 mn sq.ft. of gross absorption in the first quarter of 2022. Electronic City is likely to witness cumulative space take up to the tune of 2-4 mn sq.ft in the next 5 years. The market currently offers high quality office space of 8.7 mn sq.ft, with an estimated supply addition of 2.5 mn sq.ft in the next 3 years. Average rentals, meanwhile, are expected to remain rangebound in the near future.
Key highlights from the report
Leasing activity in the office market of Electronic City is driven by the IT and allied industry; the sector has contributed more than half of the space uptake since 2019. Manufacturing companies, with a share of 10%, are also a significant demand generator
The micro-market offers attractive office rental arbitrage opportunity for occupiers across industries. Furthermore, the talent pool availability is not only limited to IT-BPM sector, but also extends to manufacturing sector and semi-skilled workers required for e-commerce, warehousing, transportation, and logistics sectors
More than 70 acres of contiguous land parcels have been identified for future development by leading developers
Relatively affordable housing options, presence of many gated communities, good social infra in terms of educational institutes, hospitals, and neighbourhood retail stores act as a shot in the arm for the entire real estate spectrum of the locality including residential real estate
Upgraded metro connectivity along with infrastructure boost is expected to further integrate the southern peripheral of the city with commercial and retail hotspots in South Bengaluru
Bengaluru Life Sciences Park (BLSP) is expected to cater specifically to life science MNCs such as Biocon, Astrazeneca, Strand Lifesciences and over 2000 start-ups in the city. BLSP is likely to provide stimulus to the overall life science sector in the country, which has the potential to witness USD 70-150 bn cumulative investments by 2030.
Sarita Hunt, Managing Director, Bengaluru, Savills India said, "Leading IT companies are currently shifting from a complete work from home model to a hybrid model that augurs well for the commercial office market of Electronic City. On the supply side, availability of land parcels is likely to bolster the developer appetite for creation of quality buildings be it office, residential or retail. Similarly, the warehousing segment is expected to benefit from the presence of nearby industrial clusters which will create significant traction in the near to medium term."
Arvind Nandan, Managing Director, Research & Consulting, Savills India said, “ Electronic City is one of the few micro-markets of Bengaluru that ticks all the boxes be it office, residential, manufacturing, data centers or life sciences. Improved demand and availability of targeted real estate products coupled with infrastructure boost and significant affordability of real estate verticals have played the driving factor in the evolution of this micro-market. With notable infrastructure upgrades on the anvil and a massive real estate potential yet to be fully tapped, we envisage Electronic City to feature prominently in the growth story of Bengaluru in the coming years.”