Gandhi City - India's first R&D based SEZ to raise US $25 million through PEs

Gandhi City for Advanced Research & Development Ltd, which has received approvals to set up the country's first R&D based Special Economic Zone (SEZ), will shortly raise US $25 million, as the first phase of investment for the project. Two top Private Equity (PE) firms have already evinced interest in investing in Gandhi City, which is in the process of creating an ecosystem to foster collaboration between the industry, institutes and research organizations near Ramanagara, 30 kilometers from the technology hub of Bangalore.

Gandhi City for Advanced Research & Development Ltd, which has received approvals to set up the country's first R&D based Special Economic Zone (SEZ), will shortly raise US $25 million, as the first phase of investment for the project.

Two top Private Equity (PE) firms have already evinced interest in investing in Gandhi City, which is in the process of creating an ecosystem to foster collaboration between the industry, institutes and research organizations near Ramanagara, 30 kilometers from the technology hub of Bangalore.

The SEZ project will have four phases of investment, spread across 10 years, to raise US $600 million through various routes. "The total project outlay is Rs 2,620 crore. Our plan is to replace minor investors by bringing in PE funds. It will be equivalent to 9 per cent of the total share-holding of Gandhi City," says Giri Devanur, Promoter, Gandhi City SEZ.

The process of acquiring 350 acres of land for the project is on. The Karnataka Industrial Area Development Board (KIADB), the nodal agency for land acquisition in Karnataka, will complete the process shortly. The SEZ will be spread over 1,000 acres, housing research labs, incubation centers, and high-end technology testing facilities.

Gandhi City will focus on multiple disciplines, such as, Pharmaceutical and Life Sciences; Automotive and Aviation; Technology and Communications, and Agricultural sciences, in association with educational institutions. It is the first of its kind SEZ modeled on the lines of Stanford Research Park, US. Gandhi City SEZ has entered into a technological understanding with Research Triangle Park, US.

Notes to Editor

Gandhi City, a premier R&D SEZ, the only such project in India. Spread across 1,000 acres near the technology hub Bangalore, India, Gandhi City SEZ aims to create an ecosystem to foster the right collaboration between the industry, institutions, and research organizations. The total investment set to flow into the project is Rs 2,620 crore in association with major technology partners.

Gandhi City is promoted by Mr. Giri Devanur, a serial technology entrepreneur and innovator. He is a computer engineering graduate from the University of Mysore, India. He also studied at the premier Massachusetts Institute Technology (MIT), Cambridge.

He has over 21 years of experience as an Entrepreneur CEO in the technology industry. He floated several companies; successfully contributed to mergers and acquisitions; and infused capital from VCs and PE firms.

Giri Devanur is the founder of Ivega, a specialist IT services provider. He successful expanded the company, in terms of growth and revenue, and sold it to TCG.

Bosch to invest 22.8 million euro in education sector in India

German auto component maker Bosch today said it will invest 22.8 million Euro (about Rs 150 crore) over the next 10 years to set up a research centre at Bangalore in association with the Indian Institute of Science.

The amount is under a programme to celebrate the firm's 125th anniversary and is a part of a total global investment of 50 million euro in the field of higher education in Germany, China, India and the US over the next 10 years. "Some 22.8 million Euro, and therefore the lion's share of the total budget, is going to India. The 10-year development project aims to set up the independent 'Robert Bosch Center for Research in Cyber Physical Systems' at the Indian Institute of Science (IISc) in Bangalore," Robert Bosch said in a statement. In collaboration with IISc, Bosch is creating a campus for IT design, cyber-physical systems that will help to save energy in buildings, mobility solutions and renewable energy. Commenting on the development, Bosch Engineering and Business Solutions (India) Managing Director Vijay Ratnaparkhe said: "With our funding for higher education in India, we are creating a perfect research and working environment for future IT specialists". The Center is expected to create an ecosystem of research and working environment for future engineers. It is planned to support the entire industry and all universities through contract research projects. The German automotive group is expanding its higher education funding and launching a new global initiative -- Bosch InterCampus Program -- in which undergraduates and scientists will research into electro-mobility, energy generation, energy efficiency, and reducing emissions from 2011 onward. "The company is investing a total of 50 million euro to provide support for universities and research projects in Germany, China, India, and the US over the next 10 years or so," the statement said. Globally in 2011, Bosch will invest about four billion euro on research and development that will employ 34,500 researchers and developers. It will register 3,800 patents. "To continue to be innovative and successful in the future, we need associates with excellent training who are committed and content. That's why we offer our workforce a professional and innovative working environment and attractive development opportunities," Bosch Director (Industrial Relations) Wolfgang Malchow said.

Semi-conductor lab for IT City

Bangalore will get a semi-conductor lab and finishing school at a cost of Rs 27 crore. The school will be run by the Indian Institute of Information Technology (IIIT). The project, an initiative by the central and state governments, will also be funded by industries.

Wipro to make aerospace components in the new SEZ for aerospace being set up at Devanahalli near Bangalore

Imec today announced the establishment of imec India in Bangalore, Karnataka, making a first step towards the Indian market with the signing of an R&D partnership agreement with Wipro Technologies, the Global Information Technology, Consulting and Outsourcing business of Wipro Limited (NYSE: WIT). Imec is a leading independent applied research organization that carries out research activities in semiconductor, nanotechnology and nanoelectronics, delivering industry relevant technology solutions.

Imec and Wipro have created a joint initiative to co-innovate and build next generation intelligent systems, called Applied Research in Intelligent Systems Engineering (ARISE). By bringing together an experienced team of system designers, user designers, process, software and system architects, this initiative aims to develop nanoelectronics and NEMS-(Nano Electro Mechanical Systems) based solutions for emerging markets like India.

The joint initiative will initially focus on developing intelligent systems based on next generation sensors, wireless and energy harvesting technologies for key industry verticals. The core team for the joint center being set up in Bangalore will draw specialist teams from Wipro and imec, with additional hiring from global talent pools across industry and academia, to create a team of highly qualified engineers/scientists.

The solutions will leverage imec's heterogeneous semiconductor process integration platform - CMORE - that offers design, prototyping and low-volume production of systems-on-chip that can combine logic with mechanical, chemical or optical functions.

Emerging markets consisting of 80% of global population offers great opportunities for intelligent products to be designed ground up to address its unique needs. Nanoelectronics is the cornerstone to provide such products, addressing societal challenges like efficient and sustainable healthcare system, sustainable urbanization, and sustainable use of energy. Imec has an excellent track record of pioneering nanoelectronics technologies and providing solutions in global partnerships with leading companies. Wipro is a leader in bringing IT solutions and product design services to market. The partnership will leverage the technology capability of imec and Product Engineering and IT integration expertise of Wipro to build right solutions for emerging market.

"Our partnership with Wipro underlines our commitment towards providing solutions for emerging markets;" said Luc Van den hove, President and CEO imec. "I'm confident that Wipro's product engineering expertise, industry vertical presence and understanding of the emerging markets will augment our research capability to develop cost-efficient products for many new markets including India."

The Wipro-imec partnership is unique in bringing together a leading Research organization in nanotechnology and a system & software engineering leader. The R&D alliance is open to other players to participate and build system prototypes based on concurrent innovations in nanotechnology and system engineering, enabling novel applications for emerging markets. Rajesh Ram Mishra, Vice President, Wipro Technologies will head this joint initiative.

"This Wipro-imec initiative ‘ARISE' will act as a bridge between industry, academia and research labs to bring in a combination of applied research, system & business design and product engineering capabilities under one roof to deliver highly affordable and sustainable solutions for emerging markets", said T K Kurien, CEO, IT Business & Executive Director, Wipro Limited. "This further underlines our commitment towards solving emerging market challenges through future ready technologies. ARISE will also be a key enabler in reverse innovation of successful emerging market solutions to address the global need."

Wipro’s infrastructure engineering division is getting into aerospace and defence components manufacturing. The first order has come from Spanish firm Compania Espanola De Sistemas Aeronauticos (CESA) for the manufacture of precision-engineered components. CESA is a subsidiary of the global aerospace and defence corporation EADS.

Pratik Kumar, president of the Wipro division, said the company would be investing about $15 million in the initial phase in establishing a greenfield venture for the manufacture of these components in the new SEZ for aerospace being set up at Devanahalli near Bangalore. “Aerospace and defence is a huge opportunity to leverage on Wipro’s core competences,” he said.

The Wipro division now provides precision-engineered hydraulic cylinders and components. The agreement with the Spanish firm involves transfer of technology as well as manufacturing workload for aerospace actuators and related precision engineered components.

The plan is to start serial production towards the end of 2012, Kumar said.

INFRASTRUCTURE,CONNECTIVITY PUSHING DEMAND FOR OFFICE SPACE IN BANGALORE NORTH

New infrastructure projects to improve connectivity,residential catchment areas in the vicinity,and the governments initiatives are leading to demand for office space from the IT sector,says Sai Prasanna


The IT industry,employing around two million professionals across India,has witnessed the fastest growth at 22.7 percent,according to a NASSCOM report.An additional 1.6 to 1.8 lakh employees are expected to be inducted just by the top five IT companies during the course of this year.
Also,with the STPI scheme being systematically phased out,the IT sector will be looking at SEZs and IT Parks,increasing the demand for them.Karun Varma,Managing Director - Bangalore and Kochi,Jones Lang LaSalle (India),explains,"As of now,the demand for SEZs continues since they offer indirect tax benefits and MAT not being viewed as a major deterrent by certain clients."

Demand for office space

Office space absorption for Bangalore has been strong for the quarter with nearly two million sqft of space leased.The IT/ITeS sector has been the major market driver for office space in this quarter.According to a report by Jones Lang LaSalle,India,the IT/ITES and the financial services sector would continue to account for 60-70 percent of office space demand.
Shrinivas Rao,CEO,Asia Pacific,Vestian Global Workplace Services,says,"Demand for SEZ space continues to remain strong with preferred destinations being Outer Ring Road (ORR),Whitefield,and Mysore Road.In the first quarter of this year,ORR witnessed absorption of nearly 0.6 million sqft with high pre-commitments in projects which are under construction."

Demand for SEZs and IT parks

The Global Investors' Meet held last year saw investments pouring into the Bangalore north region."The Devanahalli Business Park (approximately 300 acres) and IT Investment Region (ITIR) which is nearly 10,000 acres have attracted IT majors who have signed MOUs with the government to set up their development centres.Further to this,private developers have land parcels in this micro-location for IT space development",Shrinivas explains.
Many corporate have started considering the north-west quadrant as a possible destination."A key driver of this demand is the availability of residential developments to create employee catchments.However,to increase the supply of IT Parks and SEZs in this quadrant,there needs to be a significant increase in demand,"says Karun.
According to Shrinivas,in the short to medium terms,the ORR stretch (Hebbal to Sarjapur Road Junction) and Whitefield would continue to witness demand primarily due to availability of operational SEZ space.In the long term,demand for office space is expected to increase along north Bangalore and ORR.

Connectivity and benefit for localities

Two important projects are all set to enhance connectivity in the northern quadrant - the improvement of a 22-km stretch of the NH-7 from Hebbal flyover to the international airport,and the High Speed Rail Link project (HSRL) from the Central Business District to the airport.Improvements include widening the 6-lane road to a 10-lane highway along with flyovers and underpasses,by the National Highways Authority of India (NHAI).Both the projects are expected to be completed in a timeframe of two to three years.According to Karun,"the locations likely to benefit are Bangalore west,south-west,northwest,and north-east quadrants,since they are well connected to the airport and the travel time to the city centre is less when compared to other IT corridors of Bangalore.Moreover,after the infrastructure improvements in this quadrant,capital values have started rising."
Shrinivas points out that apart from infrastructure,connectivity to the city centre,proximity to the airport,supporting residential catchments,availability of large land parcels,zoning regulations (mutation corridor - NH7),and government initiatives are the key factors which have worked in favour of north Bangalore.

Demand for residential spaces

According to Karun,due to the anticipated development in north Bangalore and the ample availability of land parcels,many apartment and villa projects were launched,especially on Yelahanka-Doddaballapur Road,IVC Road,Nandi Hills Road and Devanahalli Road."Until now,developers were targeting mid-segment clients,but of late,based on the increased demand,many high-end apartment and villa projects have also been launched,"he adds.
Demand for residential space in this corridor is mainly from IT/ITeS sector driven by employees working in IT Parks operating along the ORR.North Bangalore has witnessed high residential activity over the last one year mainly in the high-rise apartment and villa developments category.Shrinivas explains,"Infrastructure projects in the north have propelled residential activity in localities such as Hennur Main Road,Yelahanka New Town,Sahakaranagar,Doddaballapur Road,Nandi Hills Road,Bagalur Main Road,and along Bellary Road (NH-7 )."

 

Demand for commercial, space to increase in 2011

Bangalore is likely to witness a robust demand in commercial and retail space in the present calender year on the back of higher economic activity.

According to a study of real estate research firm Jones Lang LaSalle India, the city is likely to absorb about 7.1 million sq ft of office space by 2011 against a supply of 7 million sq ft in this period.


“A majority of the expected absorption is likely to take place in the secondary and Whitefield micro-markets,” Abishek Kiran Gupta, head-research and REIS, JLLM said.
In the meantime, the office market has witnessed a total transaction of 2.77 million sq ft in the first quarter of CY10, which is 7.36 per cent higher than the previous quarter. The total net absorption in the city was 958,091 sq ft, of which the central business district (CBD) and others accounted for 18 per cent of the absorption during this period.

Some of the key transactions during this period are Math Works leasing a 10,076 sq ft on Ulsoor Road, Impetus Leasing 20,000 sq ft on the Outer Ring Road among others. In the rental space, the average rent for office space in the CBD increased to Rs 78 per sq ft from Rs 76 sq ft in the first quarter of CY10. Similarly, the retail space is expected to see a momentum during the present calender year.

“Demand is expected to gain momentum and the total absorption in 2011 is likely to be about 2.31 million sq ft against a supply of 3.3 million sq ft,” the report said.

However, the report said vacancy rate was expected to rise from 5.8 per cent in 2010 to 16.4 per cent in 2011.

According to JLLM, the retail market absorbed 200,000 sq ft of retail mall space during the first quarter of CY11. ‘The high streets of Indiranagar, Koramangala, Whitefield, BEL Road and Old Madras Road accounted for 277,995 sq ft of the leasing activity indicating a surge in demand in retail space,” the report said.

Vacancy has also fallen to 5.5 per cent in the first quarter from 5.8 per cent in the last quarter. Some of the deals during this period are Pantaloons leasing 20,000 sq ft, Costa Coffee leasing 3,000 sq ft among others. Referring to retail rentals, the report said rental and capital values across micro-markets of Bangalore were expected to rise in 2011.

“We forecast rental values in the prime city area to reach Rs 184 per sq ft per month by the end of 2011,” the report said.

The appreciation in rental and capital values is anticipated in the prime city due to the lack of supply in the pipeline to meet growing demand, he added.

Rentals in Bangalore go through the roof

Is it cheaper to buy a home in Bangalore than rent it? According to a report brought out by a real estate portal, the answer is ‘yes’.

The report on property rentals, brought out by real estate portal 99acres.com, shows how rentals have skyrocketed in the city, so much so that real estate experts recommend that it would be cheaper to buy a home in the city than rent it.

According to the study, Bangalore saw the steepest rise in rentals during the January-March quarter at 13%. It was higher than Mumbai, Pune and Delhi.

As per the latest survey, conducted by Makaan.com, JP Nagar has seen the highest appreciation with rentals moving up by 30%. Marathahalli and Whitefield witnessed 24% and 9% rise in rent real respectively. Indiranagar’s rental value remained steady.

Neville M Vaswani, MD, Vaswani Group, said: “Bangalore has a lower rental rate base compared to Mumbai, and so the 13% rise looks magnified. Considering rental prices were not high to start off with, a 13% increase is actually becomes conspicuous,” he said.

Offering a contradictory view, Ashotosh Limaye, associate director—strategic consulting, Jones Lang Lasalle Meghraj (JLLM), said: “In such situations, capital values appreciate, making it unaffordable for people to shift from renting to buying a property. It is a question of increasing your budget by a few thousand rupees (for renting) as compared to a few lakhs rupees (for buying). People have no choice but to rent.”

Vikram Bapat, executive director– tax & regulatory service–PricewaterhouseCooper (PwC), believes North Bangalore is likely to see the sharpest rise.

“Bangalore is witnessing a shift in focus from the electronic city region towards North Bangalore because of its proximity to the airport along with commercialisation of agricultural land. Going forward, rental values will pick up in the Northern belt of the city, along with the Sarjapur region,” he said