Retaliatory sanctions by the Indian government against China including the ban on 59 Chinese apps may have a marginal impact on the commercial real estate sector in Mumbai, Bengaluru and the National Capital Region, realty consultants said.
Several of these companies like TikTok occupy premium office space in metro cities, and if the ban continues, they will start vacating their offices, say property brokers. Besides, TikTok and some others were actively looking for more office space to expand their India operations, and those plans are now on hold.
“UC browser and TikTok are the two main companies who occupy large office space in Delhi, Bangalore and Mumbai. At a time when there is already a tenant exodus, further exits by international companies may dent the commercial real estate sector,” said a property consultant, speaking on the condition of anonymity. Another property consultant said TikTok was actively looking for office space and had even scoured for properties in March.
“They were looking for 1.5-2 lakh square feet but they will put the plan on hold for sure. There is no confirmation of any of these companies vacating the space as of now but if the ban continues, it is obvious that they will shut the office,” said a Delhi-based consultant.
The India-China standoff in Ladakh might also impact the decision of companies in mobile and automobile sectors, as they also invest heavily in office space and manufacturing facilities. “The current scenario can have some impact on leasing activities. We will know of the extent of impact with time,” said Mudassir Zaidi, Knight Frank India’s executive director for north. Smartphone companies Vivo and Oppo have large manufacturing facilities in Greater Noida in Uttar Pradesh, apart from offices in Mumbai, Delhi and Bengaluru.
A Bengaluru-based market expert said telecom equipment company Huawei was one of the largest tenants in the city with 1 million sq. ft. While, smartphone maker One Plus occupied 200,000 sq ft, rivals Xiaomi and ViVo too had leased office space in the city.
App companies are largely occupying co-working space, possibly 700-800 seats. TikTok is in talks to rent space across Mumbai, Bangalore and Gurgaon. This deal has gone slow and no big leasing is being done by Chinese firms,” said a Bengaluru-based market expert.
Chinese firms account for less than 1%of the total leasing portfolio in the country, experts said. “UC browser occupies three floors in Cyber City, which is the prime space in the NCR. It’s not just about leasing but also the number of people they employ directly or indirectly. Besides impact on commercial leasing, it will also result in job losses,” said an NCR-based consultant.
On June 29, the Indian government banned 59 mobile apps, citing security concerns.