Motilal Oswal’s research report on Brigade Enterprises
We note that absorption in the Bangalore office market is being driven by three major factors – consolidation, expansion and relocation. Out of gross leasing of 15msf in CY18, net leasing is estimated at 8-9 msf, which implies that many existing tenants are moving to new and better properties/locations. Around 32-33msf of new supply is likely to come on board in the city by 2021, and the current low vacancy rate of 5-6% (7-8% in East Bangalore where tech gardens are located has) indicates that this supply is likely to be absorbed well. Rental growth was estimated at 5-6% YoY for CY18, with large part of demand coming from MNC IT companies.
We maintain our Buy rating on the company and raise our target price to INR316, implying an upside of 28%.
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First Published on Mar 25, 2019 05:21 pm