Office rentals remained stable across the major office markets in India in Q2 2021.
Bengaluru-based online gaming start-up, Gameskraft Technologies, has bought an office space in the city for Rs 129.99 crore, documents accessed by Propstack showed.
The deal for the 1.21 lakh sq ft property was registered on August 31, 2021. Gameskraft bought the property spread across 1.21 lakh sq ft from Embassy Property Developments, the documents showed. The property, called Embassy Techsquare, Delta, is located in Marathahalli, Bengaluru’s eastern suburb that is a commercial hub and has residential areas.
Gameskraft has bought the sixth, seventh and the eighth floors of the building. Gameskraft and the Embassy Group did not respond to queries.
As per a report by KPMG, gaming is valued at just under $1 billion and is expected to grow at 41 percent a year and by 2024 it will touch $3.75 billion in India, with subscriptions, in-app purchases, advertising and platform fees comprising the revenue streams.
Following the COVID-19 induced lockdowns, the world’s largest gaming deals took place last year. US based social gaming company Zynga buying two titles from the portfolio of Istanbul-based Peak Games for $1.8 billion.
“This is positive news for the overall office sector and Bengaluru in particular. Online gaming is one of those sectors which has been thriving during the pandemic. And with gig economy and concepts like work-from-home becoming more mainstream, the gaming industry will create more opportunities for employment and recreation,” said Raja Seetharaman, co-founder Propstack.
Anuj Puri, Chairman of ANAROCK Property Consultants, said that “As vouchsafed by a recent ANAROCK report, the main southern cities have overtaken their western and northern counterparts in terms of both supply and absorption of commercial spaces. As Indian's Silicon Valley and one of the most important commercial hubs in the country, Bengaluru will continue to attract high-value office space deals. Occupiers and institutional investors will continue to maintain a hard focus on this market.”
In another transaction, Vijaya Diagnostic Centre Ltd has bought a commercial property from Omkar Carriers and Movers Pvt Ltd worth Rs 35 crore on August 11, 2021 in Hyderabad, documents accessed by Propstack showed.
The total built up is 1,24,97 sq ft, the documents showed.
According to a report by Anarock, three major cities in south India -- Bengaluru, Hyderabad and Chennai -- dominate India's office market with the contribution of 66 percent of the total demand for office space during the last financial year 2020-21.
The main Southern office markets have overtaken other regions in terms of new supply, net absorption, and even rental growth. Among the top seven cities, Bengaluru, Hyderabad and Chennai saw their share of total office leasing increase to 66 percent in FY21 from 47 percent in FY18.
Net office absorption in FY21 in the top cities was 21.32 mn sq. ft., and these three southern cities absorbed approx. 14.06 mn sq. ft. MMR and Pune absorbed 4.56 mn sq ft (21 percent) and NCR 2.3 mn sq ft (a mere 11 percent share), the report said.
Mumbai Metropolitan Region and Pune absorbed 4.56 million sq ft (21 percent) and NCR 2.3 million sq ft (a mere 11 percent share). During the financial year 2017-18, 31.15 million square feet of office space were leased in the top seven cities. In 2017-18, 31.15 million square feet of office space were leased in the top seven cities.
Of this net absorption, the southern cities accounted for 47 percent, the western region 33 percent and the northern region 17 percent.
"The remarkable growth in the office market of these three southern cities when viewed against their western and northern counterparts is directly attributable to robust demand by the IT/ITeS sector, affordable rentals, and the exponential growth of start-ups locally over the past few years." Anarock Chairman Anuj Puri said.
The manufacturing and industrial sectors are also driving demand in these three cities, he added.
In terms of new office supply also, the share of southern cities increased from 40 percent in FY18 to nearly 63 percent in FY21.
Of the total new office space completion of 40.25 mn sq ft in FY21 across the top-seven cities, 63 percent, or about 25.55 million sq ft, was from the south. The share of the main western markets fell to just 19 percent in FY21 from 40 percent in FY18, the consultant said.
"Notably, between FY18 and FY21, office rentals in each of the southern cities have also shown double-digit growth," Anarock said. During the period under review, office rentals in NCR remained more or less stagnant, while MMR and Pune saw a mere 2 percent and 8 percent rental growth, respectively.
In Bengaluru, average monthly office rentals increased 15 percent to Rs 77 from Rs 67 per sq ft in FY18. Rentals in Chennai grew 11 percent to Rs 60 from Rs 54 per sqft in FY18.
"In Hyderabad, average monthly office rentals rose from Rs 51 per sqft in FY18 to nearly Rs 57 per sqft in FY21 (up 12 percent)," Anarock said.