T & ITES sectors continue to drive the real estate market in Bangalore

M Rochan



BANGALORE’S transformation, from being a pensioner’s paradise to a bustling metropolis, is thanks to the IT & ITES sectors. “The available talent and cosmopolitan culture of Bangalore are a big draw for corporates. Per capita income in the city is on the increase and the average Bangalorean has a higher purchasing power today,” says J C Sharma, MD, Sobha Developers.
Commercial: According to international property consultant DTZ, Bangalore, which is likely to figure in the top two cities globally in office space absorption this year, will witness an oversupply of 38%, where the supply is pegged at 18.3 million sq ft, while the absorption figures stand at 13.3 million sq ft. Out of 12 million sq ft of fresh office supply expected in 2007, only 0.5 million sq ft is estimated to be contributed by CBD and 0ff CBD areas, as per DTZ data. “CBD rentals have been on the rise, between 11-13%. This is owing to the fact that the CBD is among the preferred locations in the city,” says Hugh
Hamilton, Director, DTZ. Despite Bangalore’s infrastructure concerns, 6.6 million sq ft of grade A office space was added to in the first half of 2007, as per a Cushman & Wakefield (C&W) report. The S.E quadrant of the Outer Ring Road (ORR), between Marathalli and Sarjapur witnessed an overall absorption of 1.1 million sq ft during the first half of the year. An estimated total supply of 2.1 million is expected in this region in 2007.
Residential: The city saw a 15-20% drop in primary sales across micro markets during the first six months of 2007, as per C&W data. This is attributed to high prices, steep home loan rates and the anticipation of a price correction amongst users. Further, there was no significant increase in prime residential prices during the first half. “Bangalore has seen an increase in NRI-interest. This should herald an era of the steady growth in the coming months for Bangalore’s residential market,” says Balakrishna Hedge, President, Karnataka Ownership Apartments Promoters Association (KOAPA). But the city is seeing an increase in villas and plotted development in the suburbs. To the North of the city Grade A projects offering villas are priced anywhere between Rs 1.2 crore on the lower end to over Rs 2.5 crore at the upper end. “In the South, Whitefield alone will see an oversupply situation in the coming months, with close to 2500 villas under development,” said an industry analyst.
Retail: Bangalore is set to witness completion of 15 malls totaling between 5.5-7 million sq ft by end 2008, as per a Jones Lang LaSalle Meghraj estimate. This apart, the city’s landmark retail project - the UB City Mall located in the central business district (CBD) will add 120,000 sq ft to the city’s retail stock by the fourth quarter FY ‘07. Average rental values in prime malls stood at Rs 150 per sq ft per month. “Rental values will continue to witness a northward trend owning to limited availability of professionally managed retails space,” Jones Lang LaSalle Meghraj local director (corporate solutions) Karun Varma said. Further, adding to the
city’s magnetic appeal is the upcoming international airport at Devanahalli.
According to Anurag Mathur, deputy managing director, Cushman & Wakefield, “most of the land between Bangalore — Devanahalli Main Road (NH -7) upto the upcoming airport has been transacted almost 18- 24 months ago by prominent developers and the remainder is what is currently being put out to sale.” While the asking rate for an acre on the Devanahalli main road (NH7) ranges between 2.5 crore to 7 crore (in rare cases), deals seem to be closing within Rs 4 crore per acre, according to industry sources. While few projects are being announced, the focus for now is on building land banks to be unlocked once the airport gets operational, according to real estate analysts. As per C&W data, the North Bangalore quadrant is to receive 900,000 sq ft of grade A office space stock in 2007. An additional 800,000 sq ft of commercial stock is under development and the same is expected to be delivered by end 2007 or early 2008.

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  • Great forum here

    I love forum vey professional and clean. i live in the us well philly to be exact just wanted to drop and see how everyone is and what not.
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