Realty Bytes: Kochi ~ The Next Emerging IT Destination In India: CBRE

Investment grade office space stock to cross 15 mn sq.ft. by 2019 from 10 mn sq.ft. in 2017

Kochi, March 30, 2017: According to CBRE, the leading global real estate consulting firm in the world, the growing demand for office space, especially from the IT sector is resulting in Kochi’s emergence as the next technological hub of India. The growing prominence of the IT sector here, coupled with various Government infrastructure initiatives and availability of quality space is making Kochi an attractive option for corporates looking to expand in southern India.

Incentives under Government’s IT Policy:

  • Single Window clearances
  • Industrial status
  • Concessional power tariff
  • Maximum FAR (upto 5 for IT developments)

As per CBRE’s latest report, God’s Own Country Kochi, India’s Emerging Real Estate Hub​, Kochi’s investment grade office space stock doubled from less than 5 million sq.ft. in 2012, to 10 million sq.ft. in 2017. As per estimates, by 2019 this is expected to cross 15 mn. Sq.ft. A majority of demand for office space in the city continues to come from the IT Sector. Kochi with its lower manpower costs, stable political environment and robust infrastructure development is fast evolving as a preferred location for corporates looking to expand their operations in the region.

 

Ram Chandnani, Managing Director, Advisory and Transaction Services, India, CBRE South Asia Pvt. Ltd. says “Over the past few years, Kochi has emerged as an attractive location for corporate expansion in Southern India. The governments initiatives aimed at promoting the city, coupled with availability of quality space, talent and connectivity to national and international cities are the major factors contributing to the growth of the city’s Real estate market. Going forward, all of this, backed by a stable state government to further enhance Kochi’s appeal as a preferred destination for IT corporates looking to execute their expansion or consolidation plans in the near future.”

Traditionally, economic activity in Kochi was driven by trading, port related activities, manufacturing, tourism and mineral exploration. From 2000 onwards the office market began to witness leasing activity, predominantly concentrated in the Central Business District. Over time office space development and activity has moved to other suburban locations in the city. The city’s growing prominence as an IT hub, is encouraging large local as well as regional developers to consider Kochi for their development projects. This has had a cascading effect on other real estate segments as well, including retail and residential real estate development which are seeing increased activity in  recent times.

Residential Segment – With office space development expanding beyond the Central Business District of the city and towards East Kochi, residential real estate development has also been catalyzed here and in Northern suburban locations. 

Retail Segment – Kochi’s organized retail stock stands at more than 3 mn sq.ft. A majority of the existing retail developments in the city is primarily concentrated within the existing CBD locations, characterized by the presence of single brand/multi-brand retail outlets. Limited land availability for large-scale retail developments has led to the development of retail in East Kochi.

Hospitality Segment - Kochi is an attractive tourist destination and serves as a transit point for travelers visiting other tourist destinations such as Munnar, Alappuzha, Kottayam and Palakkad. With the establishment of the IT/ ITeS industry in Kochi, the hospitality sector has also witnessed a surge in the number of business travelers to the city.

Compared to the other southern cities, Kochi has various advantages including rentals for commercial space (1.5-2 times lower than other office hubs in South India), availability of talent, better infrastructure development and last but not least the various policy initiatives. Going forward the city will present various opportunities for developer and corporates for real estate development.  

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Disclaimer:

Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.
 

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.​

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