Bengaluru pips Mumbai in BFSI office space

BENGALURU: India’s record

office space

absorption of about 47 million sqft last year was boosted greatly by the leasings done by the banking, financial services and insurance (BFSI) sector across the country, and more particularly in Bengaluru.


In the second half of 2018, BFSI contributed 18% of the total leased space of 25.2 million sqft, or 4.5 million, up from 14% in the same period in the year before, according to independent property consultancy Knight Frank. IT/ ITeS’s contribution dropped to 31%, from 37%, in the same period. These two sectors have long been the anchor lessors in India’s commercial office market.

Bengaluru led in BFSI, taking as much as 42% or 1.9 million sqft of the total leases signed by this sector. Mumbai, the country’s financial hub, followed at 35%. Bengaluru is scoring over Mumbai as digitisation is becoming core to financial services, and the tech city is where digital talent is. So, while companies like Goldman Sachs have their investment banking in Mumbai, a large chunk of their global technology operations is done out of Bengaluru.

The BFSI sector saw the most increase in transactions’ share largely due to payment gateway companies taking up spaces in a big way especially in Bengaluru. These payment gateway companies included Visa, which expanded its total area by 50,000 sqft with property developer Bagmane in Bengaluru. American Express and PayPal also took up large lease areas in the city.

The biggest banking deal last year was done by US bank JP Morgan, which took 1.1 million sqft space with an option for another 0.5 million in Embassy Tech Village along the Outer Ring Road (ORR) in Bengaluru.

“Not only JP Morgan, but banks such as State Street, Morgan Stanley and HSBC all leased to expand last year. IT/ITeS companies have reached a critical mass in the city and their rate of expansion would not be at a fast rate. It is the BFSI companies with their back office work that are adding seats,” Thirumal Govindraj, managing director of commercial real estate provider RMZ Corp, said.

Bengaluru boasts of a huge presence of five of the six US big banks, including Wells Fargo, JP Morgan Chase, Goldman Sachs, Morgan Stanley and Citibank. HSBC and Standard Chartered, both Asia-focused UK banks, Australia and New Zealand Banking Group (ANZ) and Deutsche Bank also have a large presence in the city.

Other major companies present include Visa, mortgage servicer provider Ocwen Financial, Northern Trust Bank, State Street, one of the biggest custody banks in the world, and re-insurer Swiss Re. Most of them started with their back office operations for technology support and shared services, but have graduated into more complex operations such as machine learning and robotics. Embassy Group, one of the city’s biggest office park providers, leased 4.8 million sqft last year across 38 deals, with BFSI contributing 25% to the total. “The demand for office space is broad based and healthy across the country,” Mike Holland, CEO of Embassy Office Parks, said.