05 September 2018

1. AltF CoWorking acquires Daftar India

AltF CoWorking has acquired Noida-based Daftar India, a shared space provider. 

(Source: Realtyplus, 28 August, 2018)

Research View

The Gurugram based private, shared and Co-working firm, ALtF CoWorking has acquired Daftar India in its first strategic take-over. Currently, all the eight co-working centers of ALtF are situated in Gurugram. This acquisition was first in line with the long-term plan of ALtF CoWorking to expand its footprints across the National Capital Region (NCR). The plug and play flexible office space provider is in a lookout to establish more centers in the rest of NCR. ALtF CoWorking is majorly targeting offices spaces at micromarkets where start-ups and small, medium-sized enterprises (SMEs) are actively looking out for affordable collaborative spaces. After the acquisition of Daftar India, ALtF CoWorking has around 14,000 sq ft (1,300 sqm) additional stock in its portfolio. It has an inventory of around 1000 seats already, which is expected to be pushed further up by another 250+ seats after this strategic acquisition. The per-seat rentals of their offices are ranging from around INR4000 (USD56) to INR9000 (USD128) per month for one desk depending on the various subscription options. Since the past couple of years, we have witnessed lot of activities in the flexible office space arena, many institutional investors are bullish about this disruptive trend in the corporate real estate, with the entry of the likes of Wework, Spaces and Cowrks in the segment. Earlier this year, IndiQube reportedly raised around USD15 million from Westbridge Capital. Similarly, in 2017 Awfis and Bhive, which are one of the biggest home-grown flexible office space operators in India raised about USD20 million and USD1.2 million, respectively.

2. Home Credit leases 1.5 lakh sq ft at Empire Tower in Navi Mumbai

The total lease tenure is five years including a rental reset after three years. The company will be paying rental of INR 55 per sq ft a month, taking the annual pay out to nearly INR 10 crore.

(Source: ETRealty, 17 August, 2018)

Research View

Home Credit India Finance, a non-banking financial company, has reportedly leased 150,000 sq ft (13,941 sqm) office space in Reliable Group’s commercial project Empire Tower at Airoli in Navi Mumbai. The company has already started undertaking possession of the property for fit-outs and furnishing. It is also in advanced talks to lease an additional 300,000 sq ft (27,881 sqm) in the same project. In our opinion, Navi Mumbai is evolving as one of the key destinations for office occupiers in recent times. In H1 2018, office demand in this micromarket, constituted 6% of the total absorption recorded in Mumbai driven by varied sectors including pharmaceutical, manufacturing, BFSI, IT-ITeS and flexible workspace operators. Consequently, the micromarket recorded a 5.9% sequential rise in rental values in Q2 2018. It also featured at the third position in top ten micromarkets in India,  that witnessed the highest rental growth in Q2 2018, only behind the CBD of Kolkata and Powai of Mumbai. Navi Mumbai benefits from strategic location owing to the proximity of rail and road public transport system, robust new-age civic infrastructure as well as excellent connectivity with Mumbai and Pune. The micromarket is expected to command higher rents going forward aided by increasing demand from Technology, Banking, Financial Services and Insurance sector for their back-office operations.

3. DLF plans to return to Hyderabad, Chennai as cash flows improve

DLF plans to step out of its home market of Delhi NCR and develop new office and residential properties in Hyderabad and Chennai.

(Source: Mint, 13 August, 2018)

Research View

As the office leasing demand continues to gain momentum in south Indian cities, the southern markets of Chennai and Hyderabad are enticing various premium developers and investors. In Q2 2018, out of the 12.6 million sq ft (1.2 million sq m) of pan-Indian gross absorption recorded, Chennai and Hyderabad contributed to about 8% of the total demand. The demand is these cities are primarily driven by the expansion of technology sector occupiers, and we expect the trend to continue over the next three years. While Chennai has a consistent upcoming Grade A office supply pipeline of about 14 million sq ft (1.3 million sqm) over 2018-2021, Hyderabad is likely to witness a robust supply pipeline of approximately 33 million sq ft (3.1 million sqm) over the same period. In our opinion, developers should have a close track of the demand in the preferred micromarkets of the respective cities and schedule the construction timelines accordingly to maintain the demand-supply balance in the market. While active supply pipeline of Grade A office spaces is likely to positively impact the growing office markets in these cities, overburdening of infrastructure should emerge as one key challenge to be faced by the stakeholders. Thus, we advise developers to proactively collaborate with the local government in enhancing the surrounding infrastructure in parallel to the upcoming developments to hedge against future urban challenges in these cities.

Contact for more information

Colliers International | Mumbai, Indiabulls Finance Centre, 17th Floor, Unit No. 1701, Tower 3, Senapati Bapat Marg, Elphinstone (W), Mumbai 400 013, Maharashtra, India | Tel: +91 022 4924 9780