Smaller office places are in demand in new normal
The pandemic saw a massive shift to work-from-home strategies. Companies are now shifting to smaller workspace options as the Unlock period is marked with staggering work from home and office. The real estate economy had come to a standstill for the last six months, and this move is beneficial in reviving the real estate economy.
As per real estate experts, the real estate sector saw a 6-8% rise in price, depending on the area. This is a promising sign. While some companies are considering shifting to the Central Business District (CBD), others are considering moving to the city outskirts where rents are less. These act as foresight investment plans that further aid in boosting the market.
According to Manandi Suresh, member of the Federation of Karnataka Chamber of Commerce and Industry (FKCCI), many companies have shifted from 5,000 sq ft offices to 3,000 sq ft offices in the CBD, depending on staff size and the availability of space. The staff size for most companies has been reduced to 200 people. Today, smaller office spaces with old-style construction are in more demand than new buildings or high-rises.
Farooq Mahmood, C&D, Silver Line Private Limited and President Emeritus, Bangalore Realtors Association of India, observes that the real estate sector saw a hike in prices in almost three years. As per his observations, the rise can be anywhere between 7% and 15% depending upon the type and area. The president of the Confederation of Real Estate Developers Associations of India (CREDAI), Kishore Jain, adds that real estate input costs have also increased, especially those of cement and steel. The average output cost has also increased due to the unavailability of more stocks in the market. Jain says there are no new constructions available, and building new properties shall take time.
In the CBD area of Bengaluru, the rate per square foot of Rs 10,000-Rs 25,000 has shot up by 8%. In suburban areas like Whitefield and Yelahanka, where the cost per square foot was Rs 6,000-8,000, market experts can see a significant increase in the rates by 6-7%. According to realtors, investors are looking for deals for a period of around three years, until there is stability from the after-effects of the pandemic.
Moreover, there has been a growing demand for conversion or creation of office-like spaces at home. Avinash P, a Bengaluru-based realtor, says that customers are demanding for the creation of spaces where conferences can be held from home. This only showcases that real estate may face a major revamp in the office space sector in the next few years.