The Mumbai skyline may be dominated by banks and financial institutions, but Navi Mumbai is playing host to an increasing number of IT/ITeS companies.
The largest occupier of office space in Navi Mumbai is IT/ITeS companies with as much as 76 per cent of the commercial space taken up by them, according to a report by real estate research firm JLL India.
While there is a common perception that the financial capital of India lacks a strong IT footprint, the Navi Mumbai sub-market has emerged as a favourite destination for IT companies. Banking, financial services and Insurance (BFSI) companies dominate commercial space in Mumbai.
Moreover, banks’ back offices / data processing centres that fall under the BFSI classification prefer Navi Mumbai and many operate out of IT buildings.
“A variety of reasons like this region’s better infrastructure, lower office rentals, connectivity to Mumbai and other areas in Mumbai metropolitan region (MMR) as also a high density of professional and higher education institutes lead to this preference for Navi Mumbai,” it said.
In the IT/ ITes value chain, business process outsourcing (BPO) call centres are most sensitive to costs, as they operate on a $1 real estate cost strategy (the real estate rent of 1 sq ft should not exceed the dollar exchange value of Rs65). BPOs are followed by knowledge process outsourcing (KPO) firms and software design firms, which operate on slightly better margins.
This results in such IT/ ITeS players zeroing in on Software Technology Parks of India (STPIs) and IT-special economic zones (SEZs) in Navi Mumbai.
The satellite city proves to be the best possible rental sub-market for this sector and in the future too, this sub-market will continue to have a strong IT footprint even if the rentals were to rise, JLL said.
On a broader level, leasing activity across top realty markets has improved over the last few quarters and the outlook for the commercial segment continues to be positive.