India ViewPoint - CRE Strategies for Startups in India April 2016
India has the third largest base of start-ups in the world after USA and UK. A key reason for India’s evolution as a global start-up hub is its strong macro-economic and demographic fundamentals—a large young population base, thriving IT/ITeS and e-commerce sectors, increased instances of funding, along with a cultural shift in the mindset of an average Indian entrepreneur displaying increasing willingness to commence individual operations.
As startups seek new ways to enhance profitability and reduce cost in the wake of increasing competition, Corporate Real Estate (CRE) strategies play a large role in shaping their overall business direction. While finalizing their office space requirements, start-ups in India should focus on the three fundamentals of cost, location and flexibility; followed by other factors such as support services offered, and proximity to social infrastructure. This is particularly true for start-ups in their initial growth / nesting stage.
CBRE’s analysis of office location choices of leading start-ups in India reveals a significant focus on the top cities of Bangalore, Gurgaon (NCR) and Mumbai. Preferred locations include HSR Layout, Indira Nagar and Koramangala in Bangalore, Sohna Road, Udyog Vihar, and Sectors 32 & 44 in Gurgaon and Powai in Mumbai.
An organized approach towards CRE management can add long-term value to a start-up firm. Landlords looking to offer options to startups in particular should be fully aware of requirements and volatility associated with them. With increasing awareness of operational dynamics of startups, both tenants and landlords are likely to arrive at efficient, tailor-made real estate solutions based on optimal utilization of space take-up.