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| Ramesh Nair, MD, JLL India |
Now, BKC has a total stock of 80 lakh square feet of office space. An additional supply of 25 lakh square feet is expected in 2012 with the completion of The Capital, FIFC and TCG Finance Centres. Over the last few years, BKC’s G Block has gained prominence as the key location within this unique micro-market. The current vacancy level at Bandra Kurla Complex stands at 16%.
Major institutions that have independent buildings in BKC include IDBI, SBI, SEBI, BOI, Dena Bank, SIDBI, PNB, ING, NSE, NABARD, ILFS, ICICI, UTI, Citibank, Canara Bank, Bank of Baroda & Oriental Bank of Commerce. Other prominent institutions include the American consulate, Dhirubhai Ambani International School and The American School of Bombay.
Now, BKC also has two luxury hotels – The Trident & Sofitel.
Despite the economic uncertainty which continues to haunt the BFSI sector in Europe and the United States, BKC’s office market continues to grow. Today, the indecision among tenants which defined 2010 & 2011 has eased. Above the last 2 years, the market needle has begun to point towards a landlord-favouring market.
This change in sentiments has come earlier than was originally expected at the beginning of last year, and can be attributed to the large deals by Citibank, Deutsche Bank & First Rand Bank – and also the lack of new quality supply in the market in 2013 & 2014.
Market conditions ..!
Leasing and buying activity at Bandra Kurla Complex continued to accelerate during the last 2 quarters. The rent correction appears to be complete, with most existing buildings and new projects recording flat rates or slight increases over the prior quarter. The overall stability of the market is a sign that it has bottomed out.
Market conditions in BKC have started to shift from tenant-favouring to neutral & a clearer transition into landlord - favourable is expected in 2013. Tenants prepared to make commitments in the short term continue to have leverage, But the window of opportunity to secure attractive long-term rental rates and quality space will begin to dwindle by end of 2012.
The Future..!
As it becomes harder to find value options in BKC, some tenants may move to lower-priced markets such as Lower Parel. Larger users are taking advantage of favourable market conditions to consolidate operations. However, smaller firms remain hesitant about making any moves until economic conditions improve further.
With the Diamond bourse soon to be operational in 20 lakh square feet of premises, the people churn at BKC will increase dramatically. How the MMRDA will address the management of this sudden onslaught of traffic remains to be seen. Other areas of concerns at BKC include the continued lack of F and B outlets & sufficient public transportation.
The Metro project announced in 2008 would be a game changer; however, this project has been drastically delayed. The monorail project, now scrapped, could have been a significant infrastructure boost for BKC.
Various infrastructure initiatives like the Santacruz–Chembur Link Road will help adjacent areas around BKC such as LBS Road, Sion, Kurla, Kalina and Mahim to develop, posing competition for BKC. Many senior executives who work in BKC are expected to shift their residence to Bandra, driving up residential prices in Bandra.
Upcoming Supply..!
Key projects in Bandra Kurla Complex over the next two to four years include:
* The Jet Godrej office project
* The Reliance headquarters-cum-convention centre
* Wadhwa’s C 66
* Kotak’s headquarters
* Enam’s new building (to be completed in 2013.)
* Luxury hotels such as The Bellagio and MGM Grand will also be completed over the next few years
* Luxury mall by Maker Group
In the long term, older buildings such as Keshwa, Madhwa, Balarama, and Metropolitan will eventually come up for redevelopment which would increase quality stock of BKC.
Major developers like Ackruti, DB Realty and RNA who have land in and around BKC could bring additional mixed use stock which would improve the integrated nature of BKC. Land supply in the vicinity is also expected to come from major landlords of the Golibar slums, including Unitech, Rohan and Shivalik.
The 2 big game-changes in the BKC micro-market will be the redevelopment of the MHADA Government colony, and the development of the 18-acre Reliance plot, which will also release 20 lakh to 30 lakh square feet of office supply into the market, apart from Reliance’s HQ.
About the author
Mr. Ramesh Nair is Managing Director (West) at Jones Lang LaSalle India
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