MNCs gobble up office spaces in Bangalore; hiring on anvil

Bangalore, April 27:  

Multinational companies are on a fast-paced expansion drive in Bangalore, taking up prime real estate space in the city and ramping up headcount.

Sources in the real estate and HR sectors said companies such as Robert Bosch Engineering India, Samsung, Ericsson, Honeywell and Volvo IT are expanding rapidly.

CB Richard Ellis India said in its recent report that almost six million sq.ft of office space was absorbed in key markets in the first quarter of 2011; Bangalore accounted for almost 36 per cent. “Majority of the lease transactions recorded in Q1 were from companies looking to expand their operations,” said Mr Shrinivas Rao, CEO – Asia Pacific, Vestian Global Workplace Services.

According to data from real estate services firms, Samsung may take up 3.5 lakh sq ft, Ericsson 5 lakh sq ft, Robert Bosch 3.6 lakh sq ft, and Amazon 1 lakh sq ft. Wells Fargo will occupy close to 3.5 lakh sq ft in the city.

Mr Vijay Ratnaparkhe, Managing Director, Robert Bosch Engineering and Business Solutions, said the company would hire in the engineering, IT and the ITeS segments. He confirmed that they have signed up for 1.2-lakh-sq-ft in Electronics City and is also looking for 2.5 lakh sq ft in Bangalore. The company is planning to hire 800-1,000 engineers in 2011-12.

Robert Bosch had announced that it would invest Rs 300 crore in infrastructure in the next two years.

HR sources said that MNC hiring, which is now running into thousands, has come full circle after taking a dip in the last few years.

For instance, Honeywell is adding almost 200 people every month, Ericsson plans to hire 5,000 people in the next couple of years across the country and EMC will hire 2,000 people.

With corporates renewing their expansion plans across most industry sectors, “both demand levels and transaction velocity are expected to remain buoyant in the near to mid term,” said Mr Anshuman Magazine, Managing Director, CB Richards Ellis India.

(This article was published in the Business Line print edition dated April 28, 2011) 

1. Samsung - 3.5 lakh sq ft
2. Ericsson 5 lakh sq ft
3. Robert Bosch 3.6 lakh sq ft
4. Amazon 1 lakh sq ft
5. Wells Fargo  3.5 lakh sq ft                     

          Total  1.6 Million sqft sqft Office Space Absorption in April 2011 Alone

Projects Cleared In Bangalore in January 2011

• BRIGADE ESTATES & PROJECTS (P) LIMITED
  Location:KIADB Industrial Area, Devanahalli Taluk, Bangalore Rural District
  Project Type:IT/ITES SEZ ,with an independent Township
  District:Bangalore (Rural)
  Date of Approval :24-Jan-11
  Investment (crs):1233.6
  Employment Potential: 26000
  Land in acres:50

• WIPRO LTD
  Location:Aerospace SEZ, Devanahalli Taluk, Bangalore Rural District
  Project Type:Aerospace Actuators and Parts
  District:Bangalore (Rural)
  Date of approval:24-Jan-11
  Investment (crs):52.05
  Employment Potential:160
  Land in acres:7.5

• TALLY SOLUTIONS PRIVATE LIMITED
  Location:Harohalli Industrial Area, Ramanagara District.
  Project Type:R & D and Software Development
  District:Ramanagara
  Date of approval:24-Jan-11
  Investment (crs):71.5
  Employment Potential:1000
  Land in acres:10

• TALLY SOLUTIONS PRIVATE LIMITED
  Location:IT/ITES Park, Devanahalli Industrial Area
  Project Type:Global Training Centre for Software Applications
  District:Bangalore (Rural)
  Date of approval:24-Jan-11
  Investment (crs):62.5
  Employment Potential:1000
  Land in acres:5

• TOYOTA KIRLOSKAR AUTO PARTS PRIVATE LIMITED
  Location:Adjacent to their existing factory plot No. 21, Bidadi Industrial Area, Ramanagara District
  Project Type:Manufacture of Automotive Transmissions 240,00 units/annum & engines – 1,08,000 units
  District:Ramanagara
  Date of approval:24-Jan-11
  Investment (crs):500
  Employment Potential:500
  Land in acres:17-29

• KIRLOSKAR TOYOTA MACHINERY PVT. LTD
  Location:Jigani Industrial Area, Anekal Taluk, Bangalore District
  Project Type:Expansion of Auto components manufacturing facility.
  District:Bangalore (Urban)
  Date of approval:24-Jan-11
  Investment (crs):120
  Employment Potential:137

• PACIFICA HOTELS (BANGALORE PROJECT) PRIVATE LIMITED
  Location:Roopena Agrahra, Silk Board Junction, Bangalore – 560 068.
  Project Type:5 Star Hotel
  District:Bangalore (Urban)
  Date of approval:24-Jan-11
  Investment (crs):200
  Employment Potential:383
  Land in acres:1.89

• RATHNAMAHAL PROPERTIES & DEVELOPERS
  Location:No.43, Jala Hobli, Hunasamaranahalli, Near Yelahanka, Bangalore North Taluk
  Project Type:Software Development Park
  District:Bangalore (Urban)
  Date of approval:24-Jan-11
  Investment (crs):369
  Employment Potential:4650

• PEOPLES EDUCATION SOCIETY
  Location:IT park near Bangalore International Airport, Devanahalli, Bangalore Rural District
  Project Type:Engineering College, Polytechnic and Management Institution
  District:Bangalore (Rural)
  Date of approval:24-Jan-11
  Investment (crs):189
  Employment Potential:750
  Land in acres:16

• MANTRI CORNERSTONE HOLDING PVT. LTD
  Location:Binnamangala, Manavarte Kaval, Krishnarajapuram Hobli, Bangalore South Taluk, Bangalore Urban District
  Project Type:Hilton Cornad Hotel, IT / Commercial Office Space
  District:Bangalore (Urban)
  Date of approval:24-Jan-11
  Investment (crs):442
  Employment Potential:5260
  Land in acres:6.07

• PERK INN INTERNATIONAL LIMITED.
  Location:Electronic City Phase II, Bangalore District
  Project Type:Integrated Infrastructure Development project
  District:Bangalore (Urban)
  Date of approval:24-Jan-11
  Investment (crs):2013
  Employment Potential:15300
  Land in acres:15.2

• TATA HOUSING DEVELOPMENT COMPANY LIMITED
  Location:KIADB Industrial Area,, Devanahalli Taluk, Bangalore Rural District.
  Project Type:Residential Township (Residential Development / Apartments / Convenience Retail).
  District:Bangalore (Rural)
  Date of approval:24-Jan-11
  Investment (crs):833
  Employment Potential:2655
  Land in acres:25

• N.K. HYGIENE PRIVATE LIMITED.
  Location:KIADB Industrial Area,, Devanahalli Taluk, Bangalore Rural District.
  Project Type: Development of Residential Township.
  District:Bangalore (Rural)
  Date of approval:24-Jan-11
  Investment (crs):640
  Employment Potential:80
  Land in acres:25

• POWERICA LIMITED
  Location: Dobbaspet Industrial Area, Nelamangala Taluk, Bangalore Rural District
  Project Type:Manufacture of DG Sets and Accessories
  District:Bangalore (Rural)
  Date of approval:24-Jan-11
  Investment (crs):170
  Employment Potential:765
  Land in acres:20

• BANGALORE INTERNATIONAL AIRPORT LIMITED
  Location:Adjacent land parcel to south east boundary of Bangalore International Airport Limited.
  Project Type:Connectivity from Airport to KIADB Aerospace SEZ / Industrial Area and Cargo Facilities
  District:Bangalore (Rural)
  Date of approval:24-Jan-11
  Investment (crs):498
  Employment Potential:4500
  Land in acres:60

• PEPSICO INDIA HOLDINGS PVT. LTD
  Location:34th KH Stone, NH – 4, Teppade Begur Village, Nelamangala, Bangalore Rural District
  Project Type:Non-Alcoholic Beverages, Fruit Juice Based Beverages, packaged drinking water
  District:Bangalore (Rural)
  Date of approval:24-Jan-11
  Investment (crs):55
  Employment Potential:980
  Land in acres:43

• SURAJ INN PVT. LTD
  Location:Ambalipura Village, Varthur Hobli, Bangalore South Taluk, Bangalore Urban District
  Project Type:Service Apartments
  District:Bangalore (Urban)
  Date of approval:24-Jan-11
  Investment (crs):124.46
  Employment Potential:1650
  Land in acres:1.83

• AUBERGINE PROPERTIES PVT. LTD
  Location:Kannamangala Village, Bidarahalli Hobli, Bangalore East Taluk
  Project Type:Software Technology Park & Hospitality Service
  District:Bangalore (Urban)
  Date of approval:24-Jan-11
  Investment (crs):164
  Employment Potential:10220
  Land in acres:4.65

• SCHNEIDER ELECTRIC INDIA PVT LTD
  Location:Plot No. 12A, Attibele Industrial Area, (leased), Anekal, Bangalore District
  Project Type:Power Factor Correction Devices like Power Capacitors, Detuning Reactors and APFC Panels, its Sub assembly & Power Quality Equipments.
  District:Bangalore (Urban)
  Date of approval:24-Jan-11
  Investment (crs):53.63
  Employment Potential:754

• TYCO ELECTRONICS CORPORATION INDIA (P) LTD
  Location:Hardware Park, KIADB Industrial Area, Devanahalli Taluk, Bangalore Rural District
  Project Type:Manufacture of Connecters, Cable Assemblies and other Electro Mechanical Component
  District:Bangalore (Rural)
  Date of approval:24-Jan-11
  Investment (crs):595
  Employment Potential:5000
  Land in acres:25

• JINDAL ALUMINIUM LTD.
  Location:4th Phase Dobbaspete Industrial Area, Bangalore Rural District
  Project Type:Aluminium Extrusion Plant
  District:Bangalore (Rural)
  Date of approval:24-Jan-11
  Investment (crs):262
  Employment Potential:700
  Land in acres:50

• CHAMPION LUXURY RESORTS PVT. LTD.
  Location:Muttur Village, Varthur Hobli, Bangalore East Taluk, Bangalore District
  Project Type:IT Park with 3 Star Hotel, Luxury Vilas & Serviced Apartments
  District:Bangalore (Urban)
  Date of approval:24-Jan-11
  Investment (crs):150
  Employment Potential:336
  Land in acres:7

• APOTEX RESEARCH PVT. LTD
  Location:Hulimangala Village, Jigani Hobli, Anekal Taluk, Bangalore Urban District
  Project Type:Pharmaceutical Dosage Forms
  District:Bangalore (Urban)
  Date of approval:24-Jan-11
  Investment (crs):348
  Employment Potential:1000
  Land in acres:10

• TAKSHASILA HEALTHCARE AND RESEARCH SERVICE PRIVATE LTD.
  Location: Devara Bisanahalli Village, Varthur Post, Bangalore East
  Project Type:Hospital – Medical Services (Joint Development)
  District:Bangalore (Urban)
  Date of approval:24-Jan-11
  Investment (crs):154
  Employment Potential:548
  Land in acres:25

• TARGET CORPORATION INDIA PVT. LTD,
  Location:IT Partk, KIADB Industrial area Devanahalli taluk, Bangalore Rural District.
  Project Type:Software and Business Service Centre.
  District:Bangalore (Rural)
  Date of approval:24-Jan-11
  Investment (crs):300
  Employment Potential:3500
  Land in acres:15

• SICAL MULTIMODAL AND RAIL TRANSPORT LIMITED
  Location:Kacharakanahalli Village, Hoskote Taluk, Bangalore Rural District
  Project Type:Inland Container Depot
  District:Bangalore (Rural)
  Date of approval:24-Jan-11
  Investment (crs):95.6
  Employment Potential:124
  Land in acres:66

Brigade monetises commercial spaces in Gateway project

Bangalore-based publicly-held real estate company Brigade Enterprises has started monetising the commercial spaces in its integrated township project — Brigade Gateway — in the city as part of its efforts to make the balance sheet asset light.

Brigade Gateway is a Rs 1,000 crore integrated project comprising of commercial, retail and residential space spread over an area of around 40 acres which is fast nearing completion in North-West Bangalore. The project comprises of two office space parcels — the majority of this space coming under the World Trade Centre brand spread over 1.1 million square feet.

According to industry information, Brigade is understood to have sold 10 per cent of the office space at the World Trade Centre, which towers over 29 floors. The company plans to sell 25-30 per cent of the World Trade Centre (WTC), which is close to around 300,000 sq ft in the near future.

“The company has sold around 10 per cent of its commercial spaces to individual investors as part its efforts to make the balance sheet asset light,” industry sources familiar with the development, said. Brigade officials offered not to comment on the transactions.

The real estate company has around Rs 162 crore of debt outstanding on its book against the World Trade Centre. Proceeds from these sales are expected to part repay the debt and the remaining is likely to be used for other new projects of the company.

Meanwhile, companies like Amazon, Siemens and KPMG have already taken spaces in the WTC on rent. “Brigade wants to lease out the whole property by March, 2012, and is likely to sell 30 per cent of the WTC space by December, 2011,” sources said.

This move by Brigade Enterprises comes a couple of quarters after it had sold a land parcel in this township for around Rs 125 crore on which a hospital is being put up. Industry sources indicate that Brigade is looking at more such deals to monetise its developments.

Taking this strategy forward, the company is understood to be mulling the sale of all the office space on another 40-acre integrated township project Brigade Metropolis coming up at Whitefield in East Bangalore. The office space in this project comprises 800,000 square feet under the brand — Summit.

According to industry sources, the company earns a margin of around 40 per cent on its commercial spaces. Brigade Enterprises, which has a presence in residential, commercial and retail segment of the real estate industry, plans to launch around 9.2 million sq ft of new projects in Bangalore, Hyderabad, Chennai along with some tier-II cities in Karnataka like Mangalore, Mysore among others.

The realtor is also planning to launch two affordable projects in the near future.

Brigade Enterprises has registered a 9.8 times rise in its net profit, to Rs 58.12 crore, during the third quarterending December of the present financial year on the back of a higher income from growth in sales and also by monetising land bank at the Brigade Gateway.

The total income of the company rose 2.2 times to Rs 144.23 crore compared to Rs 65.31 crore registered during the corresponding period last year. During October-December, operating profits of the company rose 6.79 times to Rs 94.28 crore compared to Rs 13.88 crore reported during the same period last year.

Bangalore tops office space absorption again

BANGALORE: Bangalore has topped the league table, outperforming the National Capital Region (NCR), in the total office space transactions across India in the first quarter of 2011, according to a report by real estate consultancy CB Richard Ellis.
With IT/ITeS firms revisiting their expansion plans in Bangalore, the IT hub accounted for almost 36% of office space absorption at over 2 million sft. The first quarter of 2011 witnessed an offtake of 6 mn sft across key market in the country, recording a 20% increase over the same period last year.
NCR took the second spot, accounting for 27% (more than 1.6 mn sft) of the total absorption .
In Bangalore, the peripheral business district of Outer Ring Road (ORR), Whitefield, Electronics City and North Bangalore have turned out to be office hotspots for companies on an expansion and consolidation drive. Almost 1.6 mn sft of fresh IT space was released into this market. The ORR market witnessed absorption of almost 0.62 million sft.
"Vacancy levels in Whitefield and ORR were high. Rentals were subdued, but they are firming up as some vacant properties have been absorbed," said Anshuman Magazine, MD, CB Richards Ellis.
Rentals of Grade A properties on ORR marginally increased from 42 per sft in December to Rs 44 per sft in March. Whitefield saw monthly rentals jump from Rs 24 per sft in December to Rs 30 per sft in March. The area has seen some key leasing activity. Biotech company Invitrogen Bio leased 28,000 sft in Tata Xylem building in Whitefield last year. Robert Bosch has taken up 91,000 sft in L&T Cyber Park in Electronics City.
The Central Business District (CBD), comprising of MG Road, Richmond Road, Residency Road and Lavelle Road, witnessed an increase in number of enquiries from corporate houses. Rentals for Grade A spaces have increased by 15% quarter-on-quarter , said the report . "There are basically smaller transactions . We have seen some big transactions like Microsoft leasing out 1 lakh sft on Lavelle Road last year. With Metro chugging on track, the CBD will see more rental action," Magazine said. Rentals for Grade A office spaces on M G Road and Residency Road increased from Rs 74 per sft in December to Rs 85 per sft in March this year.
The South Bangalore micro markets of Banerghatta Road, JP Nagar, and Jayanagar suffer from lack of supply, so has seen limited action. North Bangalore has seen some demand, but the area too suffers from lack of quality space, the report said.

Bangalore's real estate scene is now looking up

The sector was in the doldrums during the economic downturn not long ago

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Sale of apartments has been good in the city
Transactions in sites, houses have picked up

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— Photo: K. Gopinathan

Boom:The garden city is again seeing a spurt in housing activities. BANGALORE: Bangalore's real estate scene, which saw a slump during the economic downturn, is clearly looking up if the sale of apartments and registration of properties is any indication. The sale of apartments has been good in the city areas, particularly of branded properties. Transactions in sites and individual houses have also picked up.
The downside, however, is that the sales are still slacking on the outskirts where hundreds of housing units developed by small individual players remain unsold, industry insiders say.
The sector that had been laid low for two years between 2007 and 2009 has improved so much so that revenue from registration of properties in Bangalore Urban district jumped to Rs. 2,556 crore in 2010-2011, an increase by 41 per cent over the previous year.
The registration of apartments has been more or less consistent since March 2010 with an average 2,150 units being registered every month. On an average 1,400 units were registered during recession, according to statistics provided by the department.
Even registration of non-agricultural land that includes sites and houses on an average have been over 5,000 properties each month as against an average of 3,000 properties during recession.
“Though the number of documents registered during 2010-2011 was less than the previous year by almost 1.75 lakh, revenue collection increased by Rs. 941 crore,” the Inspector-General of Registration and Commissioner of Stamps B. Shivappa, told The Hindu. He attributed this to high value transactions that took place in 2010-2011.
Stable prices
“While the sale of apartments has picked up, the property prices have stabilised despite spiralling input cost,” Confederation of Real Estate Developers Association of India (CREDAI) member S. Suresh Hari said. He said that the sales in the real estate sector were not speculative as it used to be before recession, and that prevailing prices were realistic. He, however, said that the recently implemented six-per cent stamp duty on joint-development agreements has affected the industry leading to higher cost.
Incidentally, Bangalore Urban district contributes 68 per cent of the total revenues from registration of properties. The sector has shown such buoyancy that the Government has now decided to revise the guidance value of properties across Karnataka, including Bangalore. The last time that the guidance value was revised in Bangalore was in 2007. The properties that have clear titles and in areas offering good facilities are on demand right now since investors do not want to invest in unbranded properties or in areas that have not witnessed any development, Builders' Association of India vice-chairman M. Ramesh said. Emerging BDA layouts such as Banashankari 6 th Stage, Visvesvaraya Layout and Anjanapura are recording good transactions, he said.
Meanwhile, properties in Bangalore North seem to be in good demand among the investors. “Gated communities are being sought by the buyers though they are a little away from the city. Despite being expensive, people prefer to be in gated communities as they offer other facilities,” Mansoor Naghnoor of REACH Realtors and Investments said.
Among other areas, he said, while properties in well-developed areas were less in number, transactions happened faster. Sarjapur and Koramangala have continued to be favoured areas among property buyers. He, however, said Bangalore South has remained dull in transactions following poor sales in the post recession period.

Investments Pour Into Bangalore

The Karnataka government today cleared 55 new investment proposals involving an investment of Rs 39,583 crore with an employment potential of 115,000.


Major investments cleared today includes

• Expansion project of Toyota Kirloskar Auto Parts Pvt Ltd at investment of Rs 500 crore in Bidadi near Bangalore
• Tyco Electronics Corporation India Pvt Ltd, which has proposed to invest Rs 595 crore to manufacture connector cables and other electrical components in Devanahalli industrial area.
• Target Corporation India Pvt Ltd, a subsidiary of the US-based Target, plans to set up a software and business service centre in Devanahalli industrial area for an investment of Rs 300 crore
• Schneider Electric India Pvt Ltd plans to expand its electronic power gadget capacity in Attibele industrial area in Anekal taluk at a cost of Rs 53 crore.
• Wipro, the third largest software exporter, has proposed to set up a unit in aerospace SEZ near the Bangalore international airport at an investment of Rs 52 crore.
• Pepsico India Holdings is expanding its unit to manufacture non-alcoholic beverages and other food products at its existing facility in Nelamangala at Rs 55 crore

The state high level clearance committee (SHLCC) headed by chief minister B S Yeddyurappa cleared these proposals at its 24th meeting here today. Briefing reporters, Murugesh R Nirani, minister for large and medium industries, said, “Most of the new proposals cleared today are expansion projects of many existing industries in the state. The state government will organise the second edition of the Global Investors Meet on June 3 and June 4, 2012, to attract more investments.

Bangalore boy Phaneesh Murthy scripted a mega deal in IT on Monday when his much smaller company,iGate Corporation,acquired the much larger Patni Computers for $1.22 billion (Rs 5,500 crore)

Bangalore: Bangalore boy Phaneesh Murthy scripted a mega deal in IT on Monday when his much smaller company,iGate Corporation,acquired the much larger Patni Computers for $1.22 billion (Rs 5,500 crore).
The acquisition gives Murthy the heft to barge into the Big Boys club and play with the likes of TCS,Infosys and Wipro as the combined entity will boast a billion-dollar topline.
The acquisition was finalised after several weeks of backroom negotiations and media speculation.The deal is expected to be closed,along with regulatory approvals,in the first half of this year.Speculation is rife that the new entity will be called iGate Global.The deal has been done at Rs 503.5 per share,valuing Patni at around $1.45 billion.TOI first reported that iGate and Apaxs winning bid was priced between Rs 500-505 per share almost ten days ago.The three Patni brothers,who together held a 45.6% stake,are selling their stake along with private equity investor General Atlantic,which held a 17.4% stake in Patni.
iGate will make an open offer for a further 20.6% stake in Patni as a result of which it will get anywhere between 63% and 83% stake in the company depending on the outcome of the open offer.The deal size is perhaps bested only by Oracle Corps acquisition of a majority stake in i-flex solutions for more than $1.5 billion in 2005.
iGate will have to raise around $700 million through debt from Royal Bank of Canada and Jeffries & Company.A further sum of $100 million will be raised from iGates cash reserves.Private equity partner Apax Partners will invest anywhere between $270-$ 480 million (depending on the response to the open offer) for a 20%-34 % stake in iGate.
The deal values mid-size Patni at around eight times EBITDA (earnings before interest tax depreciation and amortisation) and at around 1.8 times revenue.Compare the valuation with that of the biggies: Infosys,Cognizant and TCS quote over 20 times EBITDA and between 5-8 times revenue.
Two bankers who worked on the deal said Patnis valuation was good,factoring in its growth profile in recent years.While Patni registered revenues of $518.7 million in the 9 months ended September 2010,the corresponding figure for iGate is less than half,at $199.5 million.

BILLION-DOLLAR BABY

FIGURING THE DEAL

The transaction is valued at $1.22 billion,including the mandatory 20% open offer to the public shareholders of Patni

iGate

to buy 45.6% shares of the three Patni founders Narendra Patni,Gajendra Patni and Ashok Patni along with 17.4% stake of PE firm,General Atlantic

iGate

will pay $921 million for buying 63% stake at Rs 503.50 apiece.It will also make an open offer for a further 20.6% stake in Patni,taking its stake to between 63% and 83%

WHEN WILL IT BE SEALED

By first half of 2011,after acquiring all regulatory approvals

THE HEADCOUNT

By Sept 30,2010,the combined headcount will be 24,834