Economy

Bangalore's realty sees a turnaround

Anjana Chandramouly | Updated on March 26, 2011

Part of Eco friendly farm practice at AME foundation (roof) Terrace. G.P. Sampath Kumar

View of Aparments and other residential colonies in and around ITPL, at White field, East of Bangalore, July 07, 2008. Photo: K_Murali Kumar.

Demand for office space to exceed supply

Thanks to the recovery in the IT/ITeS sectors, the Bangalore real estate market has seen revival of demand, especially in the commercial segment where the city is a clear favourite across the country. The Silicon Valley of India, the preferred location for many IT/ITeS companies, is expected to see the highest demand for office space during 2010-14 of about 42 million sq ft, according to a report from global real estate services firm Cushman & Wakefield.

Bangalore, NCR and Mumbai, the top three cities, together make up for 46 per cent of the total demand for pan-India office space, pegged to be at 240 million sq ft over the five years (between 2010 and 2014). However, the report points out that Bangalore constitutes the largest share of the demand pie. In fact, it will be the only city where the demand would exceed the supply during this period, because requirements of IT companies are much larger compared with other sectors.

Another realty services firm Jones Lang LaSalle India says that demand for large-sized offices grew notably in this market during 2010, as companies such as Microsoft, Unisys, Accenture, Cognizant, NDS, ACS, Infinite Computer Solutions and L&T Infotech leased office space of over 1 lakh sq ft each. For 2011, a total of 7.64 million sq ft of absorption is expected. In its outlook for 2011, the company says that an encouraging business sentiment, prospects of a global economic growth and expected long-term growth in domestic markets will drive the demand for office space in the city.

Demand revival

The cheer is evident in other real estate segments too – retail, residential and hospitality. Demand for retail space is expected to be the highest in Bangalore with about 7.6 million sq ft. Industry experts estimate the future mall supply, between 2011 and 2013, is expected to be about 7 million sq ft. According to them, rental and capital values would also appreciate across malls during 2011.

With companies back on hiring mode and salary hikes getting into double-digit figures, it is no surprise then that the residential market is booming again.

Cushman & Wakefield pegs the demand for residences at about 2.3 lakh units over 2010-14. Buoyed by growing demand, some developers hiked their prices during 2010, signalling the revival in this segment.

Trends noticed so far during 2011 point out to a healthy demand and supply in the residential property market. Localities such as North Bangalore, Kanakapura Road, Whitefield and Sarjapur Road continue to garner considerable interest from property buyers and developers alike.

The popularity of North Bangalore, as has been witnessed over the past few years, is still high thanks to its proximity to the international airport. IT hubs Whitefield and Sarjapur Road that boast of a good social infrastructure, with its ready catchment of the well-heeled and cash-rich young professionals, continue to be the hot-spot destination for developers as well as buyers.

Published on March 25, 2011

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