Bangalore is seeing a lot of development in infrastructure and real estate. The epithet ‘India’s Silicon Valley’ is only being boosted, owing to more and more land being dedicated to the establishment of tech parks and commercial real estate Grade-A office space (office space with basic infrastructural facilities such as air-conditioning, electronics and so on).
According to global workplace solutions provider Vestian CEO (Asia Pacific) Shrinivas Rao, “In the last five years, around 50 million sq ft of commercial real estate Grade-A office space has been absorbed, out of which more than 75 per cent has been taken by IT/ITeS.”
Most of this is concentrated in four to five markets across the country, of which around 7 to 9 million sq ft/year has taken place in Bangalore and the National Capital Region (NCR) in the last four to five years. Chennai has seen around 4 to 6 million sq ft/year, Mumbai 6 to 8 million, while Hyderabad has seen 4 to 6 million sq ft/year. The rest of the country has absorbed the balance 18 to 24 million sq ft.
Further Rao said, “This year, Bangalore has got absorption of around 10 million sq ft (more than the average). Next year, we will witness vacant space covering around 12 million sq ft, out of which 6 million has already been pre-committed to the Special Economic Zone.” The remaining 6 million sq ft is yet to be committed.
As it goes, close to 75 per cent of the 12 million sq ft is being used for IT/ITeS and the remaining for office space. This has its share of positives and negatives. Rao said that by the next year, the positive trend in terms of real estate development is that SEZs are committed, but it still remains to be seen as to when, the remaining 16 million sq ft of empty space will be committed in the City.
But for the planned absorptions to happen, real estate rates might need some corrections. As realty rates have gone up due to rising costs and rising interest rates, people anticipate a recessionary situation like in 2008, prompting companies to cut spending and put expansion plans on hold. “With the softening of demand, even rentals may go down by the third quarter of next year. Specifically, as far as Bangalore is concerned, we anticipate decent correction in terms of land and rental,” Rao observed.
According to global workplace solutions provider Vestian CEO (Asia Pacific) Shrinivas Rao, “In the last five years, around 50 million sq ft of commercial real estate Grade-A office space has been absorbed, out of which more than 75 per cent has been taken by IT/ITeS.”
Most of this is concentrated in four to five markets across the country, of which around 7 to 9 million sq ft/year has taken place in Bangalore and the National Capital Region (NCR) in the last four to five years. Chennai has seen around 4 to 6 million sq ft/year, Mumbai 6 to 8 million, while Hyderabad has seen 4 to 6 million sq ft/year. The rest of the country has absorbed the balance 18 to 24 million sq ft.
Further Rao said, “This year, Bangalore has got absorption of around 10 million sq ft (more than the average). Next year, we will witness vacant space covering around 12 million sq ft, out of which 6 million has already been pre-committed to the Special Economic Zone.” The remaining 6 million sq ft is yet to be committed.
As it goes, close to 75 per cent of the 12 million sq ft is being used for IT/ITeS and the remaining for office space. This has its share of positives and negatives. Rao said that by the next year, the positive trend in terms of real estate development is that SEZs are committed, but it still remains to be seen as to when, the remaining 16 million sq ft of empty space will be committed in the City.
But for the planned absorptions to happen, real estate rates might need some corrections. As realty rates have gone up due to rising costs and rising interest rates, people anticipate a recessionary situation like in 2008, prompting companies to cut spending and put expansion plans on hold. “With the softening of demand, even rentals may go down by the third quarter of next year. Specifically, as far as Bangalore is concerned, we anticipate decent correction in terms of land and rental,” Rao observed.
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