Hinduja Realty to unlock value of 2,500 acres land holdings

Four years after announcing its foray into realty business, the Hinduja Group has crystallised its plan to unlock its real estate holdings of 2,500 acres belonging to its listed as well as its privately owned businesses through Hinduja Realty Ventures Ltd.

The group run by four brothers is aiming to turn its realty business into a flagship revenue generator in the next 5-7 years with projects planned over a nearly 300 acres across the country.

"Intermittent cycles may be there, but realty business will offer the best growth in the long term," said Ashok P Hinduja, chairman of Hinduja Group India. "It (unlocking value) will take time. We have a capacity to hold and use this opportunity to cautiously leverage our property."

In the next five years, the group's real estate development arm Hinduja Realty Ventures will develop projects over these 300 acres that are owned by group companies such as Ashok Leyland, Gulf Oil Corp, Hinduja TMT. "We hold around 2,500 acres of land parcels in India through group companies and privately. All of this will flow into realty development through Hinduja Realty Ventures in phase-wise manner," Hinduja said.

Hinduja is unfazed by the pain faced by several real estate firms. Real estate holds a growth pattern that no other sector could boast. The firms that are facing troubles are those that are highly leveraged," he added.

"We'll do it in a modular basis," said Hinduja and hinted that the group's realty firm will soon sign up with private equity investors on key projects.

The company will be spending around Rs 7,300 crore to develop nearly 40 million sq ft of space in the next 5-7 years at Bangalore and Hyderabad. Of this developable space, around 27 million sq ft will be saleable and leasable.

These four projects include three land parcels totaling over 200 acres in Bangalore and an 86-acre plot in Hyderabad.

On Wednesday, the company started work on an IT/ITES park on over 39.67 acres owned by group company Gulf Oil Corp at Yelahanka in Bangalore. The project is estimated to cost around Rs 1,800 crore on joint development basis with Gulf Oil.

The land owner, Gulf Oil, will get 30% of the entire developed area of 8 million sq ft. Of this, revenue area will be 3.82 million sq ft of IT SEZ and 1.23 million sq ft of non-SEZ space including a hotel, serviced apartments, a mall and offices, Gulf Oil Corp informed BSE on Thursday.

Following the announcement, the Gulf Oil share price on Thursday rose by 4.5% to Rs 83.85 a share. The project is scheduled to be completed in a phased manner in five and a half years, while revenues will start flowing in from last quarter of 2013-14. For this project, Hinduja Ventures' cost component for this project will be Rs 1,350 crore.

Posedge opens R&D centre in Bangalore

n order to establish an Asia Pacific presence, California-headquartered IP solutions provider Posedge Inc. has opened new design centres in India and Taiwan.
"The expansion in Taiwan and India will include an R&D centre to serve local, regional and global customers," the company said.

According to the company, the Posedge Research & Development Centre (PRDC) team in Bangalore, India will consist of over a dozen engineers focused on the growing wireless market segment with the development of Wi-Fi systems as part of the company's growing wireless technology innovation. This will include a clear focus on MAC and base band technologies as well as DSP and algorithms.

On the other hand, the new PRDC team in Taipei, Taiwan will host over ten RF engineers.

"We are excited in the growth at Posedge and the opening of our new Taiwan and India sites," said Venkat Kodavati, vice president, engineering, Posedge. "As part of our continuing commitment to the IP market, we have embarked upon a plan that leverages technology and innovation to better serve the needs of the global marketplace. To that end, Posedge is strengthening and expanding its research and development network; the expansion of the Posedge R&D centres will lead to breakthrough products and technology in the coming years."

"The opening of the Posedge R&D centres in Taiwan and India will allow Posedge to attract the best talent available from around the world and provide the most innovative IP solutions moving forward," the company said.

Ascendas promoter of ITPL to develop a 250 acre IT park in Devanahalli

Govt hard-sells state in Japan,Spore

Tries To Evoke Interest Among Investors In A Bullet Train Project

 The Karnataka government has done some hard-selling to investors in Japan and Singapore in the run up to the Global Investors Meet (GIM) in June.

During a road show for the event in Japan,the government made a case for Toyota and Honda to expand its presence in the state.The government sought assistance from the Japan External Trade Organization (JETRO) and Japan International Construction Company (JICC) to prepare a detailed plan for a bullet train project in Karnataka.The state delegation headed by industry minister Murugesh Nirani met Japan's leading train designer Diazo Nozawa,who was associated with the first bullet train in 1964.

The government is keen on a bullet train project that would link Bangalore,Mysore and Chennai in the first phase.In subsequent phases,Bangalore would be connected to Belgaum via Tumkur and Chitradurga along NH4,and with Bidar via Gulbarga.The cost of developing a 1-km stretch for the project is estimated to be Rs 200 crore.

Nirani said Japanese investors made a representation to the state government for setting up a Japanese village spread over 500-1,000 acres in Karnataka.The area would accommodate a number of Japanese companies.We have proposed three sites -- in Narsapura,Vemgal and Tumkur -- for the project, Nirani said.He noted there were only 80 Chinese companies in Karnataka three years ago,but today there are 196.
The government has also asked JICC to prepare a detailed project report to provide better connectivity between Bangalore and Mangalore.

In Singapore,the government talked to business space provider Ascendas for a 250 acre IT park in Devanahalli.Ascendas promoted one of the first IT parks in Bangalore,the ITPB (formerly ITPL).A theme park in Mangalore on the lines of Singapores Sentosa Island,at an investment of Rs 250 crore,is also being considered.Nirani said over 300 investors participated in the road shows in Japan and Singapore.

How much of Niranis ambitions will fructify remains to be seen.The maiden edition of the Global Investors Meet in 2010 witnessed the signing of nearly 400 MoUs with promises of an investment of close to Rs 4 lakh crore.But in the two years since then,only Rs 10,000 crore has been invested,though the government says many more are in the works.

Realtors add designer touch to luxury living

Designers are lending their names to residential projects by adding bespoke features.Like fashion brands,individual designers are endorsing projects that reflect the progressive lifestyle of a discerning few who are willing to shell out a premium for all things superior.

 

 

Legendary rock star Mick Jaggers daughter Jade Jagger is adding her design flair to 70 apartments in Equinox Realtys 400-unit residential project in Hebbal in Bangalore.These apartments of 4,000-6,000 sq ft are priced between Rs 5 crore and Rs 10 crore.She is also designing Lodhas Fiorenza project coming up off the Western Express Highway in Goregaon,Mumbai.The 4-tower project offers 2,3 and 4 BHK apartments ranging between Rs 1.71 crore and Rs 4.87 crore,said real estate consultancy Cushman & Wakefield.

Panchshil Realty has tied up with yoo,an international interior design firm founded by Philippe Starck,for its yoopune luxury project in Kharadi.These units admeasuring 5,110-6,900 sq ft are priced at Rs 15,000 per sq ft.

Pune-based Amit Enterprises has roped in Sachin Tendulkar as a brand ambassador for its residential project in Ambegaon.Sachin is,however,not designing the project that houses 846 units comprising 2 and 3 BHKs.Gauri Khan is designing the interiors for Kolte Patils Glitterati project in Wakad in Pune.Actresses,too,are tying up with developers for projects.

Indian premium home buyers have been displaying a distinct predilection for an international flavour in their residential picks.Developers have little choice but to cater to this trend,considering the fact that there is a lot of competition for branded residences, said Anuj Puri,chairman & country head of real estate consultancy Jones Lang LaSalle India.

Higher aspiration and sophisticated lifestyle have spawned a demand for such bespoke residences in NCR,Mumbai and in select micro-markets in Bangalore,Chennai and Pune.Unlike fashion brands that come in at a conceptual stage,individual designers have a lot more riding on their shoulders in terms of product development, said Anand Narayanan,national director (residential),at realty consultancy Knight Frank India.
Many cash-rich NRI and HNIs are lapping up branded residences that are aesthetically superior.The buyer conversion rate in branded residences is quite high, adds Puri.

Some time ago,Parmeshwar Godrej lent her name to design the interiors of a 3,401 sq ft apartment in Planet Godrej in Mahalakshmi,which had a reserve price of Rs 15 crore or Rs 44,000 per sq ft.Mumbai-based lifestyle infrastructure company Samira Habitats has launched signature villas styled by fashion designer Sabyasachi Mukherjee in Alibaug.

Populous, Feedback consultants for international convention centre

KSIIDC has shortlisted consortium of Populous Design, Australia and Feedback Infrastructure Services as consultants for an international convention centre here.

The centre will come up on 35 acres of land adjacent to Bangalore International airport (BIA) at Devanahalli, at a cost of Rs 250 crore.

nodal agency

The Karnataka State Industrial and Infrastructure Development Corporation (KSIIDC), which owns the land, has been designated as the nodal agency to take up the project construction.

KSIIDC has selected Populous and Feedback as consultants through a global tender.

The consultants are to develop concept design, architectural design and offer project management consultancy for ICC.

The state government is going in for ICC to tap the potential of Bangalore airport which has become a regional hub in South India.

seating capacity

“The ICC is being planned with a minimum of 6,000 seating capacity main convention hall besides many small conference halls, food courts and exhibition centre,” said a senior KSIIDC official.

“The Karnataka Chief Minister in his Budget has spelt the urgent need for ICC and had said the design process for it will be completed within the next six months and work on the project under EPC contract to commence this financial year,” he added.

On Thursday, the Karnataka Chief Minister, Mr D.V. Sadananda Gowda, in the presence of Mr S.R. Vishwanth, Chairman, KSIIDC, issued the Letter of Award to Mr Andrew James, Director, Populous Australia.

The Chief Minister speaking on the occasion said when ICC is completed, it would provide maximum business-to-business (b2b) and business-to-consumer (b2c) opportunities and boost the prominence of Bangalore in the global arena.

“ICC will also have the distinct advantage of being adjacent to BIA and will act as an epicentre for many global events, stimulating host of business opportunities for the state,” he said.

The Chief Minister also directed the KSIIDC to take up the development of ‘Aero City' which is also to come up adjacent to the airport on 400 acres of land.

Aero City project will have signature/iconic buildings with world class facilities and social infrastructure offering plug and play space for high-tech and knowledge based industries in the field of aero science, nano-technology and financial sector, health sector besides IT.

Britannia to monetize its land in city

Britannia Industries,run by the Wadia Group,has initiated the process of looking for close to 4 lakh sqft of office space in the city.The company is in talks with multiple techparks and developers,said sources in the know of the development.

Britannias move signals how traditional Indian business houses are monetising their land parcels bought at historic prices,to emerge as potential real estate players.

Sources in the realty sector confirm Britannias intent of monetizing its 6-acre parcel of land,which it currently operates out of Old Airport Road,one of the citys arterial roads connecting the central business district to the IT hub of Whitefield.At current market prices,the marquee land parcel is valued at over Rs 450 crore.

Commercial rentals in the area hover around Rs 80 per sqft,while capital values in the luxury residential apartment space are in the range of Rs 12,000 to Rs 15,000 per sqft.

The company is scouting for office space in Whitefield and Outer Ring Road,but it is still in the process of finalizing the location which might take anywhere between 6-8 months,sources told .One reason for the time lag is being attributed to the large inventory and the kind of space that Britannia requires.
An email sent to Britannia MD Vinita Bali did not elicit any response.

As reported Earlier,Britannia had a couple of months ago sought advice from real estate consultancy firms on a redevelopment model for its current headquarters.

Britannia is believed to have finalized plans of doing a mixed-use development project which includes high-end residential units and commercial office space.Indications are that Bombay Realty,the real estate arm of the Wadia group,would be given the task to execute the redevelopment of the company's property.

But promoters of Wadia Group have had initial discussions with Bangalore based RMZ Corp for developing the property,said sources.

Given that this land parcel is situated on the main road,it enjoys an FSI (floor space index) of around 3 to 3.5,which translates to a built-up area of 10-lakh square feet,for a 6-acre property.The built-up area could be more if Britannia chooses to load transferable development rights (TDRs) in the project.

A TDR is a tradeable certificate issued by the Bruhat Bengaluru Mahanagara Palike (BBMP) to landowners in lieu of area surrendered by them for developing public amenities.The landowner is entitled to FSI in the form of development right certificate (DRC).

But,plans of going high-rise might face hurdles as the property is located near the citys old-HAL Airport,which is being used by the defence forces.

Primal SEZ @ whitefiled gets approval

(ii) Request of M/s. Primal Projects Limited for addition of land in the sector specific SEZ for IT/ITES at Ballandur village, VarthurHobli, Bangalore East taluka, Bangalore Urban District, Karnataka

After deliberation, the Board decided to approve the request of M/s. Primal Projects Limited for addition of land measuring 2.023 hectares in the SEZ thereby making the total area of the SEZ as 14.696 hectares. The approval is subject to the contiguity of the SEZ being maintained.

Karle SEZ gets Approval

Item No. 50.9: Requests for increase/decrease in area
(i) Request of M/s. Karle Infra Project Private Limited for increase as well as decrease in area of the sector specific SEZ for IT/ITES/BPO SEZ at Nagavara village, Bangalore North Taluk, Karnataka

After deliberation, the Board decided to approve the request of M/s. Karle Infra Project Private Limited for addition as well as de-notification of an equal area of 6.187 hectares, resulting in no change in the area of the SEZ. The approval is also subject to the contiguity of the SEZ being maintained and the DC’s certificate that the developer has refunded all the tax/duty benefits availed under SEZ Act/Rules in respect of the area to be denotified.

http://www.sezindia.nic.in/writereaddata/updates/BOA_50th_minutes.pdf

Wipro SEZ @ Sarjapur Raod gets Approval From Center

(ii) Proposal of M/s. Wipro Limited, for setting up of a sector specific Special Economic Zone for IT/ITES at Sarjapura, Anekal Taluk, Bangalore Urban District, Karnataka, over an area of 14.523 hectares.

The Board noted that the Developer was in possession of the land. The Government of Karnataka had also recommended the proposal for formal approval vide their letter dated 21.03.12. Accordingly, the Board decided to grant formal approval to the proposal of M/s. Wipro Limited, for setting up of a sector specific Special Economic Zone for IT/ITES, at Sarjapura, Anekal Taluk, Bangalore Urban District, Karnataka, over an area of 14.523 hectares.

http://www.sezindia.nic.in/writereaddata/updates/BOA_52nd_minutes.pdf

Gulf Oil Corporation's Bengaluru Project Notified as Special Economic Zone

Gulf Oil Corporation Ltd had announced its plans for developing its 39.37 acres property at Yelahanka, Bengaluru into an IT/ITES SEZ of 30 acres and the balance 9.37 acres for hospitality, retail malls and hotels/service apartments.

The Ministry of Commerce and Industry, Government of India has vide its notification dated March 14, 2012 notified the Company's project at Bengaluru, admeasuring 12.14 hectares (30 acres approx) situated at Yelahanka as Special Economic Zone for set up of a sector specific information technology and information technology enabling services including Electronic Hardware and Business Process Outsourcing, under Section 4(1) of the Special Economic Zones Act, 2005.

The Gulf Oil Corporation Ltd stock closed the day at Rs.79.30, up by Rs.3.10 or 4.07%. The stock hit an intraday high of Rs.81.30 and low of Rs.77.20.

The total traded quantity was 1.07 lakhs compared to 2 week average of 0.20 lakhs.

@Walmart Labs to expand Bangalore facility

Global retailer Walmart's e-commerce platform builder @Walmart Labs, on Tuesday, announced that it planned to hire 180 more developers in 2012 to work at its new facility here. The new 50,000 sq. ft. facility, which could house up to 400 developers, currently employs 20 developers.

Anand Rajaraman, Vice-President, Walmart e-commerce and Head, @Walmart Labs, said if and when the facility scaled up to full potential, it would be on a par with its biggest e-commerce development lab based in Silicon Valley. The development centre in the Valley now employed 200 developers, he said.

Incidentally, Mr. Rajaraman founded Kosmix, an early pioneer in the online shopping space, which had founded Junglee, which was later acquired by Amazon. Walmart acquired Cosmix last April in a bid to strengthen its online commerce platform.

Karnataka IT exports touch Rs 1.3 lakh crore in FY12

Karnataka's IT exports zoomed nearly 50 per cent to touch Rs 1.3 lakh crore in 2011-12, a top state official said today.

"It's (IT exports) now Rs one lakh thirty thousand crore. It is as per the actual figures," Karnataka IT Secretary M N Vidyashankar told reporters.

"Lot of new markets have been discovered in Europe, Asia Pacific, Latin America and Africa. Penetration has increased," he added.

In 2010-11, Karnataka had recorded IT exports of Rs 87,000 crore, according to Vidyashankar.

He said the IT department would hold a meeting with the industry soon to discuss the projections for IT exports in the current fiscal.

Meanwhile, IT department officials said a Karnataka Resident Data Hub is planned to be set up this year. It will identify each resident in a unique manner and contain details of the benefits provided to the residents.

It has been noted that the major challenges in implementing beneficiary-oriented welfare programmes are in respect of reaching the needy residents, who have not been able to access the benefits so far, and also to prevent leakages due to multiple benefits to the same individual.

The proposed hub would address these challenges and improve governance of benefit distribution to the state's residents.

"This proposed hub will link all databases of Government", Vidyashankar said.

Officials also said UID-enabled delivery of major beneficiary oriented welfare schemes would be launched as a pilot in Tumkur and Mysore districts, before extending them across the entire state. So far, 1.4 crore residents in the state have enrolled for UID including 95 per cent residents in Tumkur and Mysore districts, officials said.

B'lore witnesses highest 1Q12 office absorption

In the latest office market report from real estate consultancy Cushman and Wakefield, the first quarter of the 2012, noted absorption across top eight cities at 7.0 million sq.ft. registering a decline of 32% over last quarter and 6% over the same period last year.

Mumbai, Kolkata, and Ahmedabad were the only markets showing a rise in absorption at 35%, 33.7% and 5.6% respectively. In contrast to declining absorption levels there was a rise by 140% in pre-commitments compared to the previous quarter and by 41% compared to the same quarter last year. Total pre-commitments during 1Q 2012 were noted at 3.7 msf across the top 8 cities. Bengaluru recording the highest pre-commitments of 2.9 msf followed by NCR (0.45 msf) and Chennai (0.1 msf).

Mumbai witnessed the highest growth in absorption at 35% due to the significant increase in space take up by the BFSI sector which is in an expansion mode. Mumbai also saw a number of large sized deals ranging from 100,000 300,000 sq.ft.; amounting to 50% of the absorption cumulatively.

Bangalore noted the highest absorption at 2.45 msf, although the absorption was lower than last quarter; it was 17% higher compared to first quarter last year. On the other hand NCR saw one of the lowest absorption levels noted at 0.55 msf due to cautious approach followed by the companies.


On the office space supply side, a total of 6.8 msf of new office space was completed, which represents a cumulative fall of 24% Q-o-Q, . This has helped in maintaining the demand to supply gap in the office market, retaining the overall vacancy to 18%. However, supply could exceed demand in cities like Mumbai, NCR and Chennai as these cities have a strong pipeline of under-construction inventory whilst Bengaluru is expected to witness the strongest demand. Developers may control construction activity so as to keep supply in line with the demand resulting in stable rentals during the second half.

  

Ravi Ahuja, Executive Director, Office Transactions, Cushman & Wakefield India - "Though the first quarter has seen subdued office absorption, majors in the IT/ITeS and domestic BFSI sectors have already indicated plans to grow which will result in strong demand for office space during the year.. Growth in non-IT absorption is also likely to provide sustained demand in the domestic market across the major cities. Further, with the predictions of a better economic environment in the USA and the Euro zone, the Indian markets would be impacted favourably."

MUMBAI

The commercial office market in Mumbai regained some momentum in the first quarter of 2012 and recorded absorption of approximately 1.4 msf spread across all micro markets. The BFSI sector remained the highest demand driver with nearly 27% of share in absorption.. Absorption was concentrated in BKC (29%) followed by Thane-Belapur Road (23%) and Lower Parel (19%). The city saw decline in pre-commitments during the quarter since companies preferred to take up space in ready developments due to high availability.

Additionally, supply remained subdued during the first quarter of 2012 and was recorded at 1.44 msf, which is 47% less than the last quarter. There was no change seen in the rental values compared to last quarter and it is likely remain at current levels owing to competitive pressure from upcoming supply.

Ravi Ahuja, Executive Director, Office Transactions, Cushman & Wakefield India said, "Mumbai has witnessed significant absorption from BFSI companies over the last couple of quarters. While BFSI companies continue to expand their corporate and back offices in Mumbai, activity levels in relation to consolidations and relocations are expected to pick up pace in the coming few quarters particularly from industry segments such as Pharmaceuticals and Engineering. In general, companies looking for work force convenience, image and quality will continue to relocate from South Mumbai to the secondary business district (SBD) of BKC and those looking for cost effective options will prefer Andheri and Lower Parel. Rental Values will remain stable with a downward bias in over supply micro-markets such as Andheri and Lower Parel for the coming quarter."

NCR

NCR witnessed low absorption during the quarter and was registered at 0.55 msf with pre-commitments further accounting for nearly 0.45 msf. The major chunk of the pre-commitments have been for IT SEZ spaces.

The CBD locations recorded a rental appreciation of approximately 14% over the last quarter, attributable mainly to the prevailing low vacancy levels and lack of supply. However, across most other micro markets, the rental values remained stable in the light of weak demand during the quarter.

Ravi Ahuja, Executive Director, Office Transactions, Cushman & Wakefield India, said, "The start of the year for the office market in NCR has been slow as absorption has been extremely low. However, the fact that pre-commitments have been better this quarter and nearly equalled the absorption is perhaps an indicator that companies will increase their presence in the near future."

BENGALARU

Bengaluru’s commercial office market witnessed the highest absorption of 2.45 msf and pre-commitments of 2.9 msf approximately in the first quarter of 2012. Peripheral markets of Whitefield and Electronics City recorded the highest absorption on account of comparatively reasonable rentals. The overall vacancy level increased to 13.2% during the quarter as majority of the new supply admeasuring 1.27 msf was delivered in the latter part of the quarter. Rental values in CBD/Off-CBD micro market (M.G. Road, Millers Road, Vittal Mallya Road, Residency Road, etc.) and suburban locations (Suburban locations include CV Raman Nagar, Koramangala, Bannerghatta Road, etc.) increased 17% and 12% respectively owing to limited Grade A supply and buoyant demand.

Ravi Ahuja, Executive Director, Office Transactions, Cushman & Wakefield India said, "Absorption levels in Bangalore will remain on the higher side as significant lease transactions are expected to be closed during the forthcoming quarters. By the end of 2012, vacancy too is expected to come down marginally."

CHENNAI

The absorption for office space in Chennai during the first quarter of 2012 was registered at approximately 0.8 msf and pre-commitments accounted for only 0.l msf.. While traditionally the IT/ITES sector had been the key demand driver in the office market, non-IT sectors accounted for majority of the absorption during the first quarter of 2012. Entire quantum of pre-commitment was registered in SEZs supply for the first quarter of 2012 was restricted to only 380,000 sf, for which suburban Guindy accounted for the majority. Existing demand for office space in CBD and off-CBD locations pushed up rentals in the by 3-4%.

Ravi Ahuja, Executive Director, Office Transactions, Cushman & Wakefield India, says that "SEZ supply in the forthcoming quarters is likely to be significant with more than 4 msf of SEZ space charted for completion in 2012. Despite the anticipation of significant supply in the following quarters, positive demand levels are likely to keep check on vacancy levels in the market."

KOLKATA

Kolkata's office market continued the previous trend of absorptions at just over 280,000 sf and continued to witness healthy demand as absorption remained high by approximately 33.7% compared to the last quarter. Rentals in prime office locations like Park Street and Chowringhee continued to appreciate on account of steady demand from various non-IT/ITeS companies. Supply was recorded at 0.6 msf, almost 41% higher than last quarter’s supply.

Ravi Ahuja, Executive Director, Office Transactions, Cushman & Wakefield India, said, "The IT/ITeS sector continued to be the key demand driver for the quarter. However, entry of companies from various other sectors like engineering and automobiles was also noteworthy. Rentals in prime office locations continued to appreciate on account of steady demand faced with lack of supply."


PUNE

Approximately 55% of this Pune's office space supply was in Special Economic Zones (SEZs) during 1Q 2012. During the same period, the city recorded absorption of just over 0.7 msf.. Absorption was highest in SEZs, which accounted for 47% followed by the Software Technology Parks (STPs) and commercial non-IT office buildings, absorbing 38% and 15% of the office space respectively. Rentals across the city have been stable compared to the last quarter, except for minor appreciation noted at approximately 3% in micro markets of Kharadi, Hadapsar and Hinjewadi.

Ravi Ahuja, Executive Director, Office Transactions, Cushman & Wakefield India, said, "Restrained supply helped the vacancy levels to drop from 25% in fourth quarter of 2011 to 23% during the first quarter of 2012."

HYDERABAD

Hyderabad saw a total overall absorption at over approximately 0.71 msf. New supply also declined compared to last quarter with approximately 0.56 msf getting operational. Due to stable supply and infusion of second generation space in the suburban micro markets and a moderate demand across the city, overall vacancy has also increased marginally. Rents have remained stable across the city on account of no major variations in demand trends.

Ravi Ahuja, Executive Director, Office Transactions, Cushman & Wakefield India, said "The growth trend of non-IT absorption has continued to remain buoyant and several companies involved in engineering , professional services and technical services have taken up space mainly in the suburban, CBD and off-CBD micro markets during this quarter. The city is expecting a fresh supply of approximately 1.5 - 2.0 msf, mostly in the suburban micro markets, over the next two quarters which should be able to cater to the needs of companies for Grade A spaces."

AHMEDABAD

Ahmedabad recorded a total absorption of over 1 lakh sf, registering an increase of approximately 6% over the fourth quarter of 2011. However, the city did not witness any fresh supply during the first quarter of 2012. The city also witnessed increase in rental values upto 6% across various micro markets in Ahmedabad. Rental values across the city appreciated over the last quarter, with highest appreciation upto 6% noted at Ashram Road and C.G. Road due to lack of availability of Grade A office space.

Ravi Ahuja, Executive Director, Office Transactions, Cushman & Wakefield India continued, "Irrespective of the slowdown, the demand for commercial space in Ahmedabad did not show any slowdown in the first quarter of 2012. The absorption for commercial office space has been largely driven by the small and medium enterprises in the engineering and pharmaceutical sectors. Also it is expected that the space absorption is likely to remain stable in the next quarter with BFSI and small scale industries expected to be the key demand drivers."

CommVault Opens Product Development Centre In Bangalore

CommVault has announced the opening of a product development centre in Bangalore, which significantly increases the company’s existing presence in Hyderabad, India, and accelerates ongoing product development efforts worldwide.

The new development centre will help raise awareness of CommVault’s Simpana software brand while attracting top software developers from the region, as Bangalore is well known as the “Silicon Valley” of the area. The opening of the Bangalore operation is the latest example of CommVault’s strategic investments to expand the breadth and depth of its global development, sales, marketing, services and support capabilities to better position the company’s long-term global profile.

The new facility also will complement CommVault’s primary development centre at its corporate headquarters in New Jersey to best meet customers’ ever-evolving business demands and technology requirements.

The latest expansion into Bangalore, widely acclaimed as a hotbed for technology development that attracts some of the region’s best and brightest development talent, will augment other company resources around the globe, including Australia, Brazil, Canada, China, Germany, Japan, Mexico, South Africa and the United States.

“We are extremely pleased to open our new product development centre in Bangalore, which is world-renowned as a hub for technology development and having a vastly talented workforce. We intend to hire, retain and develop best-of-breed engineers and developers who can assist us in delivering technology advancements that continue to serve our customers’ data and information needs,” said N. Robert Hammer, Chairman, President and CEO, CommVault.

ITIR meet could push land acquisition

First Phase Of 25-Year Programme Will Be Developed On 3,000 Acres In 5 Years

The high-powered committee meeting headed by cabinet secretary Ajit Kumar Seth to decide on Karnatakas proposal for an Information Technology Investment Region (ITIR) in Bangalore would speed up land acquisition.

The meeting on Wednesday is likely to consider granting in-principle approval to the project,which has been cleared by the department of electronics and IT.Besides it,16 other departments in the Union government have reportedly cleared the project.

The state government has proposed setting up of an ITIR over 10,000 acres on 42.51 sqkm with an estimated investment of Rs 90,000 crore in two phases.While 65% of the area will have processing facility,the rest is expected to have basic infrastructure like schools,hospitals and malls, Harikumar Jha,managing director,Karnataka State Electronics Development Corporation (Keonics),the nodal agency on ITIR,

 

 

In the 25-year programme,the first phase is expected to be developed in five years on 3,000 acres.After both Houses of the legislature passed the bill,the Karnataka Information Technology Investment Region Act,2010 was enacted in July 2010.The state-owned Karnataka Industrial Areas Development Board (KIADB) issued a preliminary notification for acquisition of 2,072 acres for Phase I.

For project implementation,two committees have been formed -- the state-level empowered committee headed by the chief minister and the management board headed by minister in-charge of IT & BT.

The region will have investment in IT parks,R&D centres,integrated townships,electronic hardware manufacturing unit and facilities along with associated services and infrastructure.The region will also have SEZs,industrial parks,free trade and warehousing zones and export-oriented units among others, Jha said.

Infosys 300 acre Srajapur SEZ Gets SEZ Board Approval

Item No. 51.25: Requests for increase/decrease in area

Request of M/s. Infosys Limited for addition of land in the sector specific SEZ for IT/ITES at villages Boorgunte, Sarjapur and Billapur, Taluka Anekal, District Bangalore, Karnataka


After deliberation, the Board decided to approve the request of M/s. Infosys Limited for addition of land measuring 78.082 hectares to the already notified area of 24.446 Ha,thereby, making the total area of the SEZ as 102.528 hectares. The approval is subject to the contiguity of the SEZ being maintained.

`35,000-cr investment to create 4 lakh+ jobs

Setting the tone for the forthcoming Global Investors Meet (GIM) that will be held in Bangalore in June, the state government on Friday cleared investment proposals of `35,785 crore, including three Special Economic Zones (SEZs) in Bangalore and Mysore.

Murugesh Nirani, minister for medium and large industries,said the proposals have a potential to provide employment for 4.83 lakh people.

The 27th State High Level Clearance Committee chaired by chief minister DV Sadananda Gowda with ministers Nirani and Raju Gowda held a marathon meeting with business delegates for four hours

to clear the projects.

The committee cleared five IT parks, with an investment of `10,184 crore, which will create 4.14 lakh jobs.`5 lakh cr target Nirani maintained that the state government has an ambitious target of attracting `5 lakh crore investments in urban development, infrastructure, housing, power, agriculture, tourism, automobile, aerospace engineering and IT/BT to provide employment opportunities to over 10 lakh

people.

“Apart from these, the government will conduct road shows in Kolkata, Mumbai, New Delhi, Hyderabad and Chennai. We were successful in attracting more investors to the road show,” Nirani said.

Nirani announced that he, along with a delegation of ministers, will leave on a five day tour of Japan and Singapore on April 15 (Chief minister Gowda, who was supposed to accompany him, had called it off in the wake of criticism by former chief minister BS Yeddyurappa).

The date of the tour was set three months ago. We are taking this trip to attract more investments,stressed Nirani. Senior officials too will head the high-level delegation to represent the state in Taiwan and USA and hold talks with the business community there to woo investments, he added.

Throwing light on the previous GIM, minister Nirani explained that about 62% of the projects have taken off and 38% of the projects backtracked due to land problems, recession and Supreme Court’s guidelines. However, 62% of realisation of projects is quite satisfying, he maintained. 

No hassles for investors

 

K Jyothiramalingam, principal secretary, commerce and industries explained that, in an attempt to create a single window agency for investors, the state government is bringing an amendment to the Felicitation

Act.

After holding two rounds of talks, suggestions have been  sent to the Law and Parliamentary Board.To streamline the process, the chief minister had directed the district collector to clear the proposals up to `15 crore, said Nirani.

 

Likewise, industries minister can now clear projects up to `250 crore; the earlier limit was `50 crore. Projects above `250 crore investments would come to the chief minister’s table, he added.

PE co Xander in talks for $250m mall buys

Private equity firm Xander Group is talking with Reliance Industries-backed Urban Infrastructure Opportunities Fund,HDFC Property Fund and real estate developers to buy large stakes in mall projects spending about $250 million,said banking sources briefed on the matter.

Xander has been in advanced discussions with southern developer Ozone Group in which Urban Infrastructure opportunities Fund (UIOF) and HDFC together hold majority interest to buy 1.2 million sq ft retail and hotel project in a deal estimated at Rs 350 crore.It has also approached Bangalore based Mantri Developers to purchase a big stake in a proposed one million sq ft mall that's completing regulatory clearances for construction.The talks with Mantri are preliminary.

The $2 billion Xander,an emerging markets PE firm,has Lord Jacob Rothschild,Harvard professor Arthur Segel and Sid Yog as its founding partners.Xander has been bullish on Indias real estate,retail and hospitality sectors.The seven year-old fund plans to own a network of malls leveraging on its close ties with Indian conglomerates like Tatas and RIL,which have significant interests in retail.

Xanders retail investments are routed through Virtuous Retail,which is also focused on building greenfield malls.Xander is aggressively talking to mall owners for acquisitions across cities,and could invest as much as $250 million in opportunistic buys, said one of the sources mentioned earlier,who did not wish to be named since talks are private.

An emailed query to Xander Group and messages to senior executives remained unanswered.Ozone COO KS Sudarshan did not answer phone calls.

RS 104-crore plan to revive Yelahanka Lake

Amusement park planned at the waterbody near airport

The Bruhat Bangalore Mahanagara Palike has unveiled a grand plan to develop Yelahanka lake as a tourist hub.

The Palike and Bangalore Development Authority have proposed to rejuvenate the lake and construct an amusement park at a cost of Rs 104 crore.

The ambitious project, scheduled to be completed in the next 18 months, has been conceived to draw foreign tourists to the lake situated close to the Bengaluru International Airport. The Palike has proposed to build a “necklace road” connecting Yelahanka with the airport stretch at a cost of Rs 54 crore. The process of acquiring 22 acres and 27 guntas of private land for the road has been set in motion. While 13 acres and six guntas will be utilised to build the 1.8-km road, parking bay and recreational facilities will come up in rest of the extent, BBMP authorities said.

Toy train

The BDA will assist in the project by funding the rejuvenation including the building of a water fountain and a bird watching island in the centre of the lake. It will provide a “toy train” around the lake. The Authority will chip in Rs 60 crore for the project.

“The objective is to ensure that tourists will have a recreational facility on the way to the international airport,” Mayor  told reporters during his visit to Yelahanka zone on Tuesday.

The Mayor visited three lakes at Allalsandra, Yelahanka and Atturu. The revival of the lake at Allalsandra is expected to be completed by September. A hanging overbridge has been constructed across the lake. However, according to a BBMP official, almost one acre and 27 guntas of land is under dispute as the Karnataka Housing Board (KHB) and some other parties staking a claim. The Mayor oversaw the road widening project at Ananthapura which has been stalled due to refusal of the apartment complex residents to part with their property for the project.

The Mayor also inspected the prototype of the garbage convertors to be installed in nearly 125 wards. The Yelahanka centre is currently producing two tonnes of manure from garbage. The BBMP is now selling the manure at Rs 20 a kilo to farmers. 

The cost of setting up the entire processing unit is put at Rs 1.7 crore with an additional maintenance cost of Rs 1.11 lakh per month.

Centre may clear Karnataka's plan to set up IT investment region

The Centre is considering Karnataka's proposal to set up a zone that will house IT, hardware and manufacturing companies.

The Information Technology Investment Region (ITIR) project is aimed at developing the IT, ITeS and electronic hardware manufacturing sectors that are looking to expand.

44 FIRMS INTERESTED

The project is to be completed in two phases over a period of 10-12 years. The estimated investment for the ITIR is Rs 90,000 crore.

Of these, the Karnataka Government has sought the Centre's support of Rs 5,790 crore.

According to the document sent to the Centre, Karnataka's Department of IT, Biotechnology (BT) and Science and Technology (S&T) a survey in 2010 revealed that 44 companies are interested in setting up units in the proposed region.

Similar proposals from Andhra Pradesh and Tamil Nadu were also made to the Centre though Karnataka is likely to get the nod. The Karnataka Government had earlier submitted a detailed concept note to the Centre for this project.

According to the plan, the State wants to set up the ITIR in an area of 42.51 sq km near the Bangalore International Airport. The Karnataka Industrial Areas Development Board (KIADB) has also announced that it will acquire 2,072 acres for the first phase of this project.

ROAD & RAIL CONNECTIVITY

The envisaged Rs 90,000-crore investment would include road and rail connectivity in two phases. The proposed project would generate about 1.1 million direct and 2.7 million indirect jobs.

Further, the State Government has proposed to lay 60-km water pipeline to supply recycled water. For power requirements, six substations and 65-km transmission lines are proposed to be set up at a cost of Rs 281 crores

Bangalore among the top 10 preferred entrepreneurial locations in the world

Silicon Valley, New York City and London are still the preferred locations for entrepreneurs to start up companies, but Bangalore is also now among the top 10 such preferred entrepreneurial locations worldwide.

While Bangalore managed to land at ninth place in the list of best cities for startups, India's financial capital Mumbai was slotted at 20.

The Startup Genome Project was started a year ago to study how entrepreneurs decide where to start their company. Started by a handful of serial entrepreneurs and startup mentors based in Silicon Valley, the project made an effort to scientifically study the startup ecosystems in different cities across the world.

While Silicon Valley had a strong early stage funding ecosystem, more mentors, ambitious and risky startups, New York City had diversity, niche focus apart from marketplace and social network focus. London startups were focused on project management and e-commerce as well as highly-educated ecosystem which bets big on perceived proven winners.

The report also offers insights on the three startup ecosystems. For instance, companies in Silicon Valley work 35% more than companies in New York City. In Silicon Valley, teams at startups work nine-and-half hours a day on average versus eight hours in London and seven in New York City.

The report, which is still a work-inprogress, has limited information on Indian cities as it was mostly the result of analysis of data received by the project from nearly 13,000 startups that used Startup Compass, a benchmarking tool launched by the Startup Genome Project.

Bangalore-based serial entrepreneur Sharad Sharma says Indian entrepreneurship gets under-reported as it is still focused on serving businesses. "The Startup Compass methodology puts a premium on velocity in achieving scale. This tends to happen slower in business-to-business startups than business-to-consumer startups."

Sharma, also a entrepreneur-in-residence and venture capital fund Canaan Venture Partners, predicted that angel funding deals will double in 2012 compared to 2011. "Ecosystems in Bangalore, NCR and Mumbai-Pune are rapidly evolving," he said while pointing out that besides startups like Flipkart, Bangalorebased startups like Hashcube and Unbxd are doing well globally.

According to a recent Ernst & Young report, 2010 saw 68 deals worth 299 take place in the early stage while 2011 saw 145 deals estimated at $ 1.2 bn. Last year was the blockbuster year for private equity and venture capital investments in India. As India begins to see its share of action some have even starte

The moving back to the country to start up companies.

"The energy in Bangalore today is comparable to the valley of 1996," says Indus Khaitan, who moved to Bangalore in 2008 after a long stint in Silicon Valley. India, he cautions, is bypassing the incubation period and jumping right into big money investments, which may lead to premature exits and burnouts.

Demand for Bangalore Office Space Continues to be Robust

With the market sentiment improving, Bangalore continues to remain as the lucrative office market destination both from the investors and corporate occupiers' perspective,

The Bangalore office market has absorbed close to 1 million sqft during the first quarter this year. The absorption was equally balanced between SEZ office and non-SEZ space. However, the challenges before the commercial property developers are the soaring input and labour cost. For Grade A warm shell building, the construction has now touched close to Rs 2,500 per sqft, according to industry sources. 

The Central Business District (CBD) of MG Road, Richmond Road, Residency Road and Ulsoor Road witnessed absorption of around 40,500 sq ft of office space, primarily in the form of mid-sized transactions, in the first quarter of 2012, according to CB Richard Ellis' first quarter report. Corporates continued to remain focused on properties in the peripheral and suburban business districts due to the minimal availability of grade A space in the CBD. Supply of around 26,000 sq ft was witnessed in this micro market while rental values remained stable when compared to the previous quarter. 

The Extended Business District (EBD) of Indira Nagar, Koramangala, Inner Ring Road, and CV 

Raman Nagar did not observe significant project completions in this quarter. Absorption of around 43,000 sq ft was witnessed, while rental values remained largely stable in the present quarter. Absorption of around 45,000 sq ft was witnessed in the South Bangalore micro-market of Bannergatta Road, JP Nagar, Jayanagar and Mysore Road. Bannerghatta Road witnessed significant number of transactions in the built-to-suit format for large IT firms expanding their presence in the city. There were no significant project completions in this micro-market during the quarter. Rental values also remained stable compared to the previous quarter. 

The Peripheral Business District (PBD) of Whitefield continued to be a priority destination for corporate occupiers, with absorption of around 0.18 million sq ft being reported in the present quarter, leading to a marginal dip in vacancy rates as compared to the previous quarter. Whitefield did not witness any supply during the review period, while Electronic City witnessed supply of about 0.30 million sq ft during this quarter. Absorption level remained unchanged in Electronics City while rental values were stable over the last quarter. 

The Sarjapur Outer Ring Road (ORR) continued to remain in focus amongst corporate occupiers, as well as developers, with supply of around 0.80 million sq ft witnessed in this quarter. Absorption of around 0.18 million sq ft was witnessed and rental values remained stable compared to the previous quarter. 

The North Bangalore micromarket witnessed supply of around 0.45 million sq ft, while absorption of about 0.10 million sq ft was recorded during the review period. Rental values increased marginally during the quarter due to limited availability of grade A office space in this region. This micro-market is currently being evaluated by large corporates as a significant quantum of office space is expected to be added to this market in the near future. 

According to industry sources, developers continue to build speculative buildings on the assumption of healthy absorption of over 11 million sqft last year and simultaneously looking for clients during the development. And PE funds continue to evince keen interest for investment in the city's commercial segment as the year-on-year absorption of office space is encouraging. 

For instance, RMZ is building 7 million sqft, both SEZ and non-SEZ space, in a new project titled EcoWorld on outer ring road. "This is just one instance of the growing confidence in the city's inherent potential for commercial property development", says Juggy Marwaha, Director, Leasing, RMZ Corp. Besides Maple Tree's new project, Salarpuria and Mantri Developers are said to be in the final stages of getting approval for large commercial development near Koramangala-Sarjapura road, according to market sources. 

The combination of strong demand and restricted supply was instrumental in bringing the city's overall vacancy rate down from10.6% in 4Q11 to 9.7% in 1Q12 and, in turn, perpetuated rental growth in the SBD and Whitefield sub-markets, says N S Srinivasa Reddy, Manager-Research, Jones Lang LaSalle. Rents in Whitefield submarket rose from Rs 32 per sqft to Rs 32.5 per sqft during the first quarter. This can be attributed to lack of ready-to-move-in office space in other sub-markets as well as increased interest from IT occupiers in this sub-market and availability of large floor plates and good-quality buildings. 

As regards leasing, the IT/ITES sector accounted for the majority of the leasing with the major companies in the sector leasing office space in Bangalore including Net App, Intercall, Caterpillar Inc, Cisco, IXIA, LIARD Technologies, Enterprise Nube, Carl Zeiss, Time Warner, InMobi, Indegene, SmileInteractive, Flipkart and Quintiles. 

Market Outlook 

The city is witnessing a number of infrastructure developments such as signal free access from Sarjapur ORR to the Airport, Mass Rapid Transit System - Metro which will enhance connectivity within the city and elevated expressway along the Bellary Road, again to the airport in Bangalore. These projects would enhance connectivity from city centre to the peripheral markets which is expected to augment the demand for office developments in the North and South-East locations of the city. Overall, the city continues to retain its status as the lucrative office market both from the investors and corporate sector's perspective.

A Bangalore record: ultra luxury flat goes for Rs 33k/sqft

The IT City's residential real estate price has touched a new peak: Rs 33,000 per sqft. A recent apartment sale at Kingfisher Towers, an ultra highend residential project coming up on Vittal Mallya Road, recorded this rate. It's said to be the highest residential capital value in the city's history.

Kingfisher Towers, 34 storeys high, is a joint venture between the UB Group and the Prestige Group.

Sources privy to the development informed TOI the apartment was one of the few remaining in Kingfisher Towers, and is on one of the highest floors, with a view of Cubbon Park. The 8,200 sqft apartment will cost about Rs 27 crore.

Super luxury homes emerging in Bangalore's city centre are attracting the wealthy. Ashok Kheny, MD of Nandi Infrastructure Corridor Enterprises, booked an 8,000-sqft apartment in Kingfisher Towers last year. Kheny would not talk about the price, but sources say he will pay Rs 24 crore.

Real estate watchers say Bangalore's real estate has come of age with an apartment rate of Rs 33,000 per sqft.

"While Rs 33,000 per sqft shows the coming of age of Bangalore's luxury residential market, it's still way behind the average price of Rs 70,000 per sqft that's quoted at many luxury residential developments in Mumbai," says Gulam Zia, national director, research & advisory services, of global property consultants Knight Frank.

Mantri's Altius was one of Bangalore's first super luxury projects . Launched in 2004, a 6,000-sqft apartment was then sold at Rs 5 crore. The price shot up to Rs 9 crore when the project was completed in 2006. Total Environment has launched a new project , Van Gogh's Garden, that offers 17 customized apartments, each having a terrace garden and a water body. The 4,000-9 ,000 sqft apartments cost between Rs 10 crore and Rs 23 crore.

At Rs 33,000 per sqft , Bangalore's rate is still way below the rates Mumbai has recorded. In November 2010, a national record was created when Flat 203 of Samudra Mahal, Worli, was sold for Rs 1,07,000 per sqft . In 2007, a fourbedroom unit at NCPA Apartments , Nariman Point, fetched a rate of Rs 97,842 per sqft.

Farook Mahmood, CMD of brokerage firm Silverline Realty, says Kingfisher Towers is "a one-of-a-kind project whose amenities, specs , infrastructure and location - overlooking Cubbon Park - cannot be recreated or compared with any other residential project in India. Just for its sheer location and view, the only comparison can be made with apartments overlooking Central Park in New York."

Essar Reality Launches Waters Edge in Bangalore

Blore will get 1,000-crore Financial City,says Pranab

A large country like India requires regional financial centres,Union finance minister Pranab Mukherjee said on Sunday at the foundation stone laying ceremony of a financial city on the outskirts of Bangalore.For a country of our size,emergence of regional financial entities can help in financial services becoming more equally distributed among the different regions of the country, he said.
The financial city near Devanahalli in Bangalore is one of the first of its kind in India and will enable financial institutions to establish and run a variety of operations,and help meet regional financial demands better.
Karnataka consistently figures among the top five states in credit-deposit ratio,while Bangalore ranks next only to Mumbai and New Delhi in terms of size of bank credit and deposit.The importance of Bangalore is corroborated by the income tax collections,as the city stands next only to Mumbai and Delhi, said Mukherjee.The proposed 50-acre Financial City will be developed over a period of three years at an investment of over Rs 1,000 crore.Space allotment letters have already been given to many banks and financial institutions including Canara Bank,Corporation Bank,Syndicate Bank,State Bank of Mysore,Indian Bank,and LIC.
The project will be executed by IFCI Infrastructure Development Ltd,, the countrys first financial institution,set up in 1948.Banks and financial institutions will be able to carry out a wide range of support activities,including back-end operations,from the Financial City,said Atul Kumar Rai,CEO,IFCI.

Work on India's First Financial City Begins

Biocon opens integrated R&D centre in Bangalore

Biocon today opened an integrated R&D centre here which is aimed at pursuing research on biologics to address unmet medical needs.

The biotechnology major said Biocon Research Centre (BRC) is a first of its kind facility in South-east Asia.

The research centre is equipped with multi-disciplinary capabilities in molecular biology, biologics process sciences, formulation research and preclinical & clinical development.

The centre, also equipped with instrumentation for extensive molecular and functional characterisation of biologics, was inaugurated by Nobel laureate Kurt Wuthrich.

Wuthrich said BRC's capabilities are at par with international standards.

"I will keenly watch the outcome of innovation from this centre as I see a lot of promise in the scientific talent at Biocon", said Wuthrich, who bagged the Nobel Prize in Chemistry in 2002.

Biocon said a team of over 300 scientists based at the 200,000 square feet BRC housed in Biocon Park would be engaged in biologics research.

The company said it aims to attract outstanding scientists from the best institutes around the world and engage with international thought leaders as well as participate in technical programmes as an effective way to enable innovation through knowledge-sharing.

Biocon Chairperson and Managing Director Kiran Mazumdar-Shaw said the company aspires to build a centre of research excellence that would pursue an innovation-led effort to develop advanced yet affordable solutions for several debilitating diseases.

Besides outsourcing, gaming industry thriving in Bangalore

Rajesh Rao is among a handful of Indian entrepreneurs who may prevent the country's software industry from getting "Bangalored".

The 41-year-old self-confessed geek runs Dhruva, a firm that sells content and services to global online game companies from a bungalow in a crowded suburb of a city that has come to embody outsourcing and the transfer of jobs from the West.

But plain vanilla outsourcing - help desks and back office operations - is finding cheaper locations abroad. India's software industry has discovered it needs to move up the value chain or enter niche areas like gaming to continue growing.

Rao, a dapper man with a soul patch beard, was drawn to multimedia computing while at university and set up his own firm. He progressed to video gaming and says he lucked into a sector that is now realising its potential. It is less than a $500 million business in India - and $50 billion worldwide and growing.

"Whenever something transcends from a geek activity to an everyday activity, that's when you can say that this is now going to become mainstream," Rao said at his unpretentious headquarters set amid shops, a temple, a women's college and cheek-by-jowl homes.

As gaming scales up, the advantages of outsourcing are becoming apparent to the firms on the U.S. West Coast that dominate the sector. Jobs that can cost up to $12,000-$15,000 per man-month there can be outsourced to companies in India like Dhruva for about $4,000-$5,000.

"The gaming industry began to discover the benefits of outsourcing, and we were already there, and so we started seeing a huge upswing in business," Rao said, speaking in a new office, set up as he expands staff. Many of the desks are unoccupied and cabling has yet to be completed.

"We are now beginning to see that big wave. Pretty much the floodgates are opening."

San Francisco-based Zynga, which started off games like FarmVille and Mafia Wars on Facebook, has also bet on Bangalore, setting up an office and a creative studio, the first outside the United States, with over 200 employees. Thomson Reuters itself has more than 6,000 staff in technology, sales, editorial and customer support in Bangalore.

Zynga Chief Technology Officer Cadir Lee said the city was attractive because it combined experience and talent.

"I see Bangalore going through a pyramid, where you started with lower-value functions like call centre work, then it moved up to BPO (business process outsourcing) and more strategic IT projects, but still very directed work," he said in a telephone interview. "At the top of that is product development. That is just getting critical mass in Bangalore."

THE UPGRADE

India's IT industry, with Bangalore firms forming the largest component, is now worth an annual $100 billion and growing 14 percent per year, one of the few bright spots in an economy blighted by policy stagnation and political instability.

But growth has tapered off from 20 plus percent a few years ago. Rising wages, uneven infrastructure and a talent pool that doesn't fully meet requirements are other worrying factors.

Technology and special skill-sets are the answer, analysts say. Indian companies are now into engineering services, alternative business models and bio-technology as well as animation and gaming. Many will offer increased revenue in addition to cost savings.

"Gaming, product development, the D of R&D (research and development), applied research, engineering and design - you can see all forms of these emerging in India," said Noshir Kaka, managing director of McKinsey and Co's India operations.

"We are going to see a whole range of alternative business models that are going to emerge. You are going to see companies that are going to put together a proprietary platform with some processing capability, added to that software development and data and analytics and give it as a combined offering. You start changing the business value proposition to a client."

Around the turn of the century, the confluence of better communications and fibre-optic networks, a pool of software talent and government incentives for the IT industry made Bangalore the global hub of outsourcing.

It started mostly as a low-cost way of dealing with issues like the Y2K bug, but it then fundamentally began to alter international business. Companies in the West began to relocate hundreds of thousands of jobs to India.

In 2008 alone, companies in the United States and Europe saved over $20 billion by outsourcing services to India, according to a McKinsey report.

Once called a pensioners' paradise, a favoured retirement spot for army and government officers, Bangalore became one of only two cities in the world to have a verb derived from its name (the other is Shanghai). Getting Bangalored came to mean losing a job to outsourcing.

Hyderabad, a rival outsourcing-focused city 550 km to the north, began to be called "Cyberabad".
But as incomes rose, low-value jobs like call centres and help desks began to make the transition to even cheaper locations like the Philippines and Eastern Europe.

Part of the answer, says B.V.R. Mohan Reddy, the founder of Hyderabad-based engineering services firm Infotech, is a "leap-frog" in technology.

"So far this business has been very linear. As more technology, maturity and confidence come into this industry, you will certainly find people ... moving to the next plateau."

Infotech, with estimated revenue this year seen up 22 percent at $250 million, is among the most technically advanced firms India, providing services like computer-aided design for aircraft engines and digitalisation of drawings and maps.

"We do participate with our customers at this point of time," said Reddy in a phone interview. "Though we are a services company, our engineers' names have started appearing in the list of patents."

Firms like Infosys, India's $6 billion outsourcing giant, are moving up the value chain in their own way and switching from traditional markets in the United States and Europe.

"We are looking at new areas like embedded systems, we have accelerated our consulting growth, we have focused on emerging markets much more," said founder N.R. Narayana Murthy, a legend in the industry.

"We have enhanced involvement in the digital economy; health care is a big area of opportunity," he said in an interview at the sprawling Infosys headquarters in Bangalore.

THE TALENT POOL

The limiting factor is a shortage of job-ready engineers, with companies willing to pay a premium for workers who have proved themselves in other IT firms. But that adds to costs and risks making companies uncompetitive, or doing to them what they have done to companies in the West.

Infosys solves the problem by trawling universities for graduates and then training them for up to eight months. Talent shops, where industry-ready skills are taught, have emerged elsewhere.

"From so-called bodyshopping in the software industry in the 80s and 90s, now we have come to a stage where complete R&D outsourcing is happening," said J.A. Chowdary, who runs Talent Sprint, a company that provides training to IT professionals.

"This calls for a huge jump in quality manpower. Many engineering colleges are able to produce students, but Nasscom (National Association of Software and Services Companies) says only 20 percent are employable. So there's a big shortfall."

Other estimates say only about a quarter of the 770,000 engineering graduates each year are ready to join the workforce. Another quarter needs training and the rest will take on non-software jobs or remain unemployed.

Because the numbers are so huge, India's IT sector will continue to grow, albeit at a slower pace. But Srini Raju, who runs the Peepul venture capital fund aimed at the IT sector, said Indians by and large lacked the

innovation and entrepreneurship skills to bolt on to talent and technology to make cutting-edge products themselves.

"There's no hunger," he said. "I am not saying they are not hard-working. The sacrifice and hunger are not there.

"In the West, they would have slept in their office for a week together. Here at 5 o'clock in the evening they start getting phone calls. I am not saying this is right or wrong. That is the way this society is. India is not a country for innovation any time soon."

Raju said he had about $700 million invested in Indian companies, but mostly in service providers.

"I will not invest in innovation," he said. "I will invest in do-ers. You can build businesses around do-ers. Around innovation, no. It's a lack of people who will do it."

Narayana Murthy at Infosys dismissed talk of a perennial lack of innovative talent and said India would one day produce an entrepreneur like Steve Jobs.

"It's impossible for me to predict what the Indian Steve Jobs will do," he said. "But I am sure there will be one. Let's remember our story is still pretty young. Innovation will come."

Google picks Bangalore as product hub for emerging markets

As part of its three-monthold emerging markets initiative, Google has chosen Bangalore and Paris as two of its main centres from where products for emerging markets like India, Africa and Latin America will be conceived and developed, according to a top Google India executive.

Google counts most of south and south-east Asia, some parts of Eastern Europe, Africa, Latin America and countries where internet penetration is less than 50%, as emerging markets.

"We are making Bangalore one of the two major centers for emerging markets," said Lalitesh Katragadda, country head, India products, Google. Katragadda, the man behind Google Mapmaker and Google's transliteration, has recently taken on the additional responsibility in the emerging markets team for Google.

"Think of us as a start-up within Google, which has a mission of getting the next five billion people online," explained Katragadda. The new group in Google will build products and features from scratch and also make existing products work for emerging markets.

"Many of the products we are building right now are still under the wraps," said Katragadda. The emerging markets team is a separate group that spans across all the seven product areas, which include Android, Chrome, search, ads, social and YouTube. Products specifically for emerging markets will be built out of the Bangalore or Paris development centres.

"It's not something Bangalore has been known for in the last few years," he added. Google has an estimated 2,000 member workforce in India, but Katragadda did not specify how many of them will work for the new team. Nelson Mattos, Google's vicepresident for product and engineering, Europe and emerging markets, leads the group with a "handful" of top engineers, product managers and marketers.

Katragadda, who is three months into the new role, said: "It now involves not only looking into all our products and making sure that they work well in India but also conceive and build new products - not just in India but also for the whole of emerging markets." New Google products for emerging markets are most likely to be in local languages and mobile based.

"If you launch a product in emerging markets that is not on mobile, that's not going to work right," said Katragadda. The Google veteran, who moved to India with Krishna Bharat, a distinguished research scientist at Google, in 2004 to set up the company's Bangalore operations, did not share the number of emerging market products in the pipeline, but said that "at least one compelling product" will be built.

"I don't think it takes more than one or two great products to really draw people to the Internet. Frankly, we are going to figure it out by launching a few experiments and have the users tell us."

Government to Make Money for Sale of Mysore Lamps Land

Bangalore logs highest Q1 growth in office space

Bangalore recorded the highest office space demand in the first quarter of 2012 at 3.6 million sq ft.

A DTZ Research report said that the cumulative absorption of space across seven cities, however, dropped 14 per cent on a sequential basis in the period. Cautious sentiments prevailed in the market as domestic macro economic indicators remained uninspiring while contrary to expectations, no drop in benchmark interest rates were affected, said the report.

According to DTZ CEO, Mr Anshul Jain, policy-level paralysis is taking a toll on the real estate sector. “Occupiers are holding on to their decisions to take up commercial A-grade office space and are likely to continue with their present stance till the third quarter of CY 2012,” he said.

Bangalore saw a demand of 3.6 million sq ft, followed by Mumbai at 1.2 million sq ft. IT firms continued to drive the demand across the country, with Mumbai being an exception as the BFSI sector remained the largest occupier segment in the city.

The report said that project completions in the period grew by 30 per cent sequentially, as pace of construction picked up in Mumbai, Bangalore and Chennai.

A turnaround is expected in October, said Mr Jain, adding that rentals will remain stable or increase marginally till then.

BEML begins work on aerospace unit at SEZ

The BEML Limited, a defence public sector undertaking, is moving forward in the aerospace vertical as part of the expansion of its defence business. In this regard, BEML has begun work on an aerospace manufacturing division at SEZ near the Bangalore International Airport, Devanahalli.

The ground breaking for commencing the civil works was performed by BEML Chairman & Managing Director V RS Natarajan in the presence of functional directors and other senior executives. BEML Limited is the first company to set up Aerospace Facility at a SEZ. The construction work has begun and this infrastructure facility shall be ready by September this year. This will pave the way for BEML to enter into Aircraft component manufacturing field. This is the second new aerospace manufacturing facility.

This aerospace facility will be capable of manufacturing aerospace components and parts, assembling aircraft and helicopters up to 21 metres tall. The facility is spread over 3,00,000 sq ft and the company has invested Rs 455 crores into this project. BEML has already set up an aerospace manufacturing division at Mysore and got certified qualifying them to design aircraft, helicopter and engine parts. Presently, this division is manufacturing ground support equipmentôground handling equipment like aircraft towing tractor, crash fire tender, weapon loader, jigs & fixtures, sub-assemblyomponents for SU-30 aircraft.

With the opening of a new facility at Bangalore, Mysore Aerospace Division will be dedicated towards manufacturing of ground support and handling equipment only whereas the manufacturing of aerospace and related parts will be moved to Bangalore factory.

The upcoming aerospace SEZ facility will have assembly hangar to produce sub/major assembly with 21-metre height for civil / military aircraft and also could be used for assembly of 90-100 seater aircraft and for the MRO of a fixed or rotary wing aircraft, sheet metal shop along with chemical milling centre, machine shop with heat treatment and surface treatment shops and composite facility.

With all these, BEML is able to take up jobs in aerospace segment right from design, virtual testing, precision/heavy manufacturing of sub-sub assembly, sub-assembly, aggregates and parts. BEML will be able to harness all offset opportunities.