India’s IT capital Bengaluru is expected to continue its lead in India's commercial real estate market with 330-340 million square feet of office stock by the year 2030, according to a report by the Confederation of Indian Industry and CBRE.
The report titled ‘Karnataka Horizon: Navigating Real Estate Excellence in the South’ that was released in Bengaluru on July 10 highlighted that the city has seen its office stock more than double to over 223 million square feet as of June 2024, from 100 million square feet in 2013, to comprise the highest share in the segment amongst all major cities in the country.
As of June 2024, the overall office stock in India stood at 880.7 million square feet, in which Bengaluru accounted for the largest contribution at 25%, per the report. This came at an average annual absorption of about 15-16 million square feet in the city over the past few years, it added.
“Over the next few years Bengaluru is expected to grow extensively in the peripheral regions…Coupled with the availability of large-sized land parcels and multiple upcoming infrastructure initiatives, the commercial sector is slated to expand significantly in the northern, eastern and southern parts,” said Anshuman Magazine, Chairman and CEO - India, South-East Asia, Middle East and Africa, CBRE India.
In the run up to 2030, the technology, engineering and manufacturing, and BFSI categories are expected to comprise the main demand drivers for Bengaluru’s office market, alongside life sciences, aviation and automobile as emerging sectors making their contribution in propelling demand.
Presently, the technology sector accounts for 30-35% of annual absorption in the city, primarily in the commercial hubs of Outer Ring Road and Whitefield, according to the report.
The report also highlighted that Bengaluru has led demand amongst global capability centres (GCCs) in India with a 41% share between 2022 - June, 2024. It credited this feat to a combination of offerings by the garden city, including a skilled talent pool, premium Grade-A assets, and a well-developed IT ecosystem.
“Karnataka's vibrant tech infrastructure must continue to evolve to retain its edge. Developing premium, sustainable tech spaces with cutting-edge facilities will be key,” opined Ram Chandnani, Managing Director, Advisory and Transactions Services, CBRE India.
Shailendra Naidu, who is a senior executive director for advisory and transaction services at CBRE, listed ease of doing business, high land costs and efficient space utilization as some long-term challenges for this market. “The method here that most development firms use to acquire land is a joint venture. In that model, there can be challenges going ahead,” he said.
According to the report, Bengaluru's retail real estate stock has more than doubled to over 16 million square feet as of June 2024, from 7.2 million square feet in 2013, to hold the second-highest share among the top Indian cities at 24%. This metric is further estimated to increase to 20-30 million square feet by 2030, representing a 1.4 times growth, the report noted.
Absorption in Bengaluru’s retail market is primarily driven by entertainment, fashion and apparel, and homeware and department stores, each accounting for about 20-30% of the annual demand, per the report. It added that the average annual absorption in this segment stands at 1.5-2 million square feet in the capital city.
Bengaluru is also a star performer housing three of the nation's 17 listed malls, the report added.
