Leases in BFSI moving up

Leases in BFSI moving up

The latest report from investment management firm Jones Lang LaSalle (JLL) India titled ‘Is Indian real estate heading towards a tectonic shift?’ Reveals that occupier profile has undergone a transition. Details of the report

22 Banking Frontiers October 2015

Some 10,738 new bank branches were opened during 2013-14, compared to 7757 branches in 2012-13 and there were 3,83,804 banking outlets in villages as of end-March 2014, compared to 2,68,454 outlets in villages as of end-March 2013, says the report ‘Is Indian real estate heading towards a tectinic shift” by Jones Lang LaSalle. It says the share of the BFSI sector in leasing volumes has been relatively stable through the last decade and in the past 2-3 years an increase in volume of leases in the sector has been noticed.

Says Ashutosh Limaye, head, Research and REIS, JLL India: “The number of leases in the BFSI sector has doubled from 7% in 2012 to about 14% in 2014. In 1H15, the contribution has been close to 15%. The total area leased by BFSI sector in 2014 was 4,273,873 sq ft. The total area leased by BFSI sector was 3,679,428 sq ft in 2013 and 1,992,112 sq ft in 2012 respectively. Within the BFSI sector, the total area leased by banks in particular was 1,544,367 sq ft in 2014, 2,174,297 sq ft in 2013 and 663,503 sq ft in 2012. The share of banks within BFSI office space occupancy was 36.1% in 2014, 59.1% in 2013 and 33.3% in 2012.”

TOP CITIES

The increase in volume of leases in the BFSI sector has become possible due to rising number of BFSI transactions. According to Limaye, the increase in transactions has been observed in cities such as Bangalore and National Capital Region, where office demand used to be IT/ IteS sector-dominated. Mumbai, being the financial capital, will continue to see increased leasing activity in BFSI, with a major contribution coming from its key commercial district of BKC. Also, tier 2 cities such as Hyderabad and Kolkata are witnessing a good number of transactions in this segment in recent times with the improvement in business environment here, especially in the former.

Sector wise Share of Leased Area,
2005-1H2015

BFSI LEASE

The range of the sizes of such BFSI offices and total areas occupied in different cities differ from city to city. The average size of BFSI leases is in the range of 5000-15,000 sq ft in most of the tier 1 cities. Limaye says while a larger number of smaller transactions are seen in NCR, Bangalore has relatively bigger average sizes, in the range of 20,000-30,000 sq ft. The estimated ratio of buying

price outlook

Rental outlook looks bright for the BFSI spaces offered in key secondary business district markets such as Mumbai, NCR Hyderabad and Pune. Predicts Limaye: “Rents will remain unde: pressure in central business districts’ BFSI spaces for most Indian cities. However, the property prices will continue to grow in this segment because of constrained future supply in BFSI markets.’

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