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Netflix's Indian subsidiary has chosen to extend its lease for a substantial 137,000-square-foot office space located in the commercial tower of Godrej BKC in Mumbai's bustling Bandra-Kurla Complex (BKC). This lease extension encompasses a duration of five years and carries a total value exceeding Rs 280 crore. Monthly rentals for these two separate leases, executed through Netflix Entertainment Services India LLP, will amount to nearly Rs 4.30 crore. Notably, this extensive office space spans across the 11th and 12th floors of the towering edifice.
Within the framework of both lease agreements, a provision has been established to facilitate an annual increment of rentals by 5 percent, culminating in a cumulative payment exceeding Rs 284 crore throughout the stipulated lease term. Netflix had originally secured this space from D Decor Properties LLP in January 2019, and the decision to renew the lease was formally ratified. The initial monthly rentals for these leases are set at Rs 313 per square foot. As part of this arrangement, Netflix will also gain exclusive access to 114 parking slots located within the tower's vicinity.
The lease renewal officially commenced on October 18, featuring a three-year lock-in period for Netflix India and a five-year lock-in for D'Decor Properties LLP. To formalize this renewal, Netflix India has provided an upfront deposit exceeding Rs 34.30 crore. Netflix India has also extended its agreement for an entire floor, spanning over 8,860 square feet with more than 320 seats, located at WeWork's Nesco coworking centre in the Goregaon suburb of Mumbai. The company will utilize this particular workspace for visual effects work dedicated to Netflix, underscoring the growing demand for content production in India.
India has notably emerged as a significant content production hub for Netflix, with a myriad of original series and films specifically tailored for the Indian market. The company has channelled significant investments into India-centric content and continues to expand its footprint within the global Indian cinema industry. Notably, 2022 witnessed Netflix's highest net subscriber additions in India in comparison to any other country. This achievement can be attributed to an aggressive pricing strategy introduced in December 2021 and an extensive slate of Indian original content and licensed films, which have significantly heightened viewer engagement and bolstered revenue growth.
India's skilled workforce and cost-efficiency advantages continue to underpin the thriving commercial real estate sector, which remains unfazed by global challenges. The robust performance of the office space leasing market within the country exemplifies this resilience. For instance, in the quarter ending September, the net absorption of office space in major property markets across India reached a six-quarter high, totalling 10.37 million square feet. This marked a remarkable increase of over 30 percent from the previous quarter, underscoring the strength and vitality of the commercial real estate sector in India.
Netflix's BKC lease renewal underscores its long-term commitment and belief in the Indian market. As Netflix bolsters its Indian content and expands in the region, this investment positions it for a vital role in India's digital entertainment landscape.
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