Space requirements of the proposed new banks will be a minimum of half a million sq.ft for retail banking activity alone, feels real estate services company Jones Lang LaSalle India.
The firm says it expects that the new banks might open around 25 branches each by end-2014, with a foray targeted toward tier I cities and supported by subsequent expansion in tier II and tier III cities and even if only five of the applicants get licenses there will be a requirement for half a million sq ft of retail banking spaces. These spaces will be mostly on the high streets of the cities, boosting the demand for retail real estate. In addition, registered offices, corporate offices and regional headquarters could mean another 0.5–1 million sq ft of office space per bank, and the back office locations would require another half a million sq ft. As a result, 4.5–5 million sqft is likely to be taken up in the short term. Moreover, the banks are likely to open up more retail and office transaction opportunities in the long term.
The firm has made this projection in its latest edition of ‘Pulse’ and the analysis is prepared by Ashutosh Limaye, head, Research and Real Estate Intelligence Service.
The analysis also says tier II and tier III cities, especially those in states offering better taxation benefits, will come into focus for corporate office locations. Grade B office space could be in demand, at least during the beginning, on the back of its wider availability and lower cost. Interestingly, in the event that some of the organisations seeking banking licences have long-owned captive space, this should not keep them from searching for office space with better location advantage and business potential, the firm said. Apart from that, the licences would result in competitive business planning, expansion and strategic relocation by the older banking players, as well as the creation of not only more jobs in the subdued economy, but also a boost to the office markets of India over the next two years and beyond.