Mumbai is not only the commercial capital of India, it’s also one of the biggest and most populated cities in the world. When it comes to real estate in Mumbai, there are more submarkets than anywhere else on the planet, especially when one takes into account the entire Mumbai metropolitan area; namely, Navi Mumbai & Thane.
Please do not confuse, the shift is not because the demand for an office on rent in BKC is losing its reign as the most sought after commercial real estate in the City and possibly all of India; it’s more that there are certain types of companies that have or are currently exploring their next office space for rent in Mumbai being Andheri.
Jagaha’s founder, Otis Critchley, has worked at various investment banks in BKC over the last ten years and from his contacts amongst other sources we have come to find this trend is real.
So what kind of companies are looking for the less expensive office space for rent in Andheri?
You guessed it, banks & financial institutions.
This is for numerous reasons where some are structural (margin compression in investment banking), to event-based (such as the liquidity crisis that has been plaguing financial firms over the last few years), to an ongoing effect of demonetization to finance firms exposed to real estate companies to name a few.
The bottom line, banks & financial institutions, whether domestic or foreign, are under pressure and have been for the last few years and must look to saving to maintain profitability.
Investment banks are largely keeping their front office staff in BKC, but what we are seeing & hearing at Jagaha is that their middle offices and back offices are being moved completely out to the bank’s respective office spaces in Andheri; of course it’s not just Andheri but we’ve found that this is the most popular location for banks to shift too.
Where does that leave offices for rent in BKC?
Not as harmed as one may think. The demand for the most elite office spaces in Mumbai remains strong. Although banking and financial firms are requiring less office space in BKC, other firms are fulfilling the demand: namely tech companies and domestic brands that are growing and MNCs that are entering India.
Let’s see how this pans out – but would expect the trend for banking & financial firm from BKC to Andheri & other less expensive (yet quality) commercial property locations to continue.