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The Bengaluru Life Sciences Park is a potential hub for startups and is expected to cater to 2,000 of them, while the Golf Course Extension Road and the Southern Peripheral Road in Gurugram in the National Capital Region (NCR) are fast emerging as the top destination for edtech and fintech companies, a report has said.

The report by international property consulting company Savills also said that startups and companies across sectors have found their office space solutions in flexible workspaces setup in Navi Mumbai.  

Ecosystem In Bengaluru May Give Birth To Many More Unicorns

With average rentals less than $1 per square feet (Sq Ft) throughout the last decade, the Electronic City continues to be an affordable choice for cost-conscious occupiers operating on a ‘$1 real-estate cost strategy’, said the report, titled ‘Dollar-Edge Rental Office Markets in India’.

“Bengaluru Life Science Park will have a dedicated incubation space with shared facilities for startups and office suites within the park. This nurturing ecosystem has the potential to give birth to numerous unicorns,” Arvind Nandan, MD, research & consulting, Savills India, told Inc42.

The first phase of the Bengaluru Life Science Park, equipped with “finest biotechnology infrastructure”, is expected to be completed by 2022-end. The park will consist of multi-tenanted buildings including a dedicated laboratory building for life sciences research and development.

Post the pandemic-induced slowdown, the leasing activity is expected to pick up from the momentum seen in the last quarter of 2021 and rebound visibly in 2022 and 2023, the report said.

The market 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 three years. Average rentals, meanwhile, are expected to remain range-bound in the near future, according to Savills.

With near dollar rents, this micro-market offers a cost arbitrage advantage over other key IT hubs in Bengaluru. 

The talent pool availability is not only limited to the IT-BPM sector, but also extends to the manufacturing sector and semi-skilled workers required for ecommerce, warehousing, transportation and logistics sectors.

The affinity among cost-conscious occupiers from startups, life sciences segments, IT-BPM and others is understated. Yet, it is a highly relevant factor in the real-estate development of the locality, the report added.

Besides, the relatively low office rentals, good connectivity and comparatively affordable housing options are the other advantages of the Electronic City. Water scarcity in peak demand season and commuting time from the airport are weak links though.

Out of the 101 unicorns in the country, Bengaluru is home to 39 unicorns which are together valued at $158 Bn. The city-based startups have raised $60 Bn in funding since 2014, as per Inc42 data.

“We foresee the warehousing segment taking benefit of the presence of nearby industrial clusters, and the rise of the ecommerce segment, which in turn will create significant traction in the near to medium term,” the property consultant’s report said.

Gurugram: The Hub of Fintech, Edtech Operations

With sub-dollar rents, Golf Course Extension Road (GCER) and Southern Peripheral Road (SPR) in Gurugram offer rental arbitrage of approximately 74% compared to premium locations.

Savills further said that startups, including edtech and fintech companies such as Chqbook, Valtech, Faircent, etc., have all made GCER and SPR the hub of their operations.

“Startups including edtech and fintech companies have taken note of the cost-effectiveness of the GCER and SPR area and are benefitting from the comparatively low rentals and talent disposal of Delhi-NCR,” Nandan told Inc42.

The fintech startups based out of the national capital have raised $8 Bn in funding since 2014, while the corresponding number stands at $600 Mn for edtech startups, as per Inc42 data.

Savills India foresees GCER and SPR gaining prominence owing to the factors such as rapid infrastructure development, sub-dollar office rentals for over a decade, occupier demand across sectors and a sizable IT-SEZ mix in the supply of Grade A office buildings, he added.

Connectivity with Golf Course Road and NH-8 and a wide variety of residential options are advantages too.

Demand from cost-conscious occupiers, especially from the IT-BPM sector, availability of grade-A quality stock, and infrastructure upgrades are highly relevant factors in the real estate growth of GCER and SPR.

BFSI and Fintech Drive Growth In Navi Mumbai

More than 10 flexible workspace operators are present in Navi Mumbai, spanning across 400,000 Sq Ft of operational office stock.

“Sub-dollar office rents have proved to be a catalyst to support the expansion of flexible workspace operators offering services to cost-conscious occupiers, especially start-ups,” the report said.

The data centre ecosystem augurs well for office demand in Navi Mumbai. The concentration of data centres may drive office leasing demand from technology, BFSI and ecommerce companies in Navi Mumbai, the report added.

According to Nandan, Navi Mumbai has emerged as the preferred location for office occupiers due to several reasons such as sub-dollar office rentals for over a decade, affordable residential rents, robust connectivity, aggressive infrastructure development, presence of institutional-grade development, and flexible workspaces providing solutions to occupiers’ scalability, among others.

“From initial demand drivers of BFSI, IT-BPM and flexible workspace operators, we are witnessing broadening of demand drivers to include engineering, manufacturing, logistics, warehousing, ecommerce and fintech companies which are making their presence felt on the Mumbai office demand sector pie,” the report said.

A large chunk of office leasing demand from the logistics segment comes from Navi Mumbai due to the presence of warehousing locations in the vicinity.

Besides, Mumbai is home to stock exchanges BSE and NSE, major banks and other financial institutions, and corporates of the country. Six fintech unicorns are based in the country’s economic capital, while the city-based fintech startups have together raised $3.6 Bn in funding since 2014. 

Strategic location between Mumbai and Pune, high-quality IT office spaces, flexible workspaces to attract entrepreneurs and occupiers looking for remote-working/work near-home options are some of the advantages of Navi Mumbai, Savills said.

It is likely to attract more BFSI occupiers, given the deep BFSI human resource pool in Mumbai, the report said.