Office Space 1 Q 2011 Report

The Central Business District (CBD) of MG Road,Richmond Road, Residency Road and Lavelle Road witnessed an increase in number of enquiries from corporate houses preferring to expand within the CBD.While the micro market did not witness infusion of any new supply, a large number of mid-sized transactions were finalized with total absorption recorded at around 0.18 million sq ft (primarily in second generation space).

Additionally, due to increase in demand and limited availability of Grade A supply or expected to be made available during the current year, rental values increased by almost 15% on a q-o-q basis.With no fresh supply infused or likely to be infused in the Extended Business District (EBD) of Indira Nagar, Koramangala, Old Madras Road, CV Raman Nagar in the near term, most companies have plans to relocate to peripheral markets of Outer Ring Road (ORR) and Whitefield for furthering their expansion and consolidation plans. Absorption was recorded at 0.25 million sq ft. Lack of Grade A supply in the EBD has led to increase in rental values by almost 9% on a q-o-q basis, predominantly in the second generation office space.

Lack of supply in the South Bangalore micro market of Bannergatta Raod, JP Nagar, Jayanagar and Mysore Road continued to pose as a deterrent for occupiers planning to set up their operations in thislocation. Office space development in this micro market is limited to Grade B buildings with no new supply of Grade A space expected in the near future.Absorption was recorded at around 0.12 million sq ft;rental values appreciated by almost 14% on a q-o-q basis.

The Peripheral Business District (PBD) of Outer Ring Road (ORR), Whitefield, Electronic City and North Bangalore is a preferred destination for occupants looking to execute consolidation and/or expansion plans in Grade A projects. Almost 1.6 million sq ft of fresh IT space was released into this market. The Outer Ring Road (ORR) market witnessed absorption of almost 0.62 million sq ft. As most of the projects that are nearing completion or are under construction have registered healthy precommitments on the ORR stretch, quoted rentals have witnessed an upward movement in the range of 4-5%  and are expected to continue to increase in the coming quarters as well.

Due to ready availability of quality space, Whitefield continued to remain the favored destination for long term commitments by corporate houses. The micro market witnessed closure of a few mid-sized transactions with absorption estimated at around 70,000 sq ft during the first quarter of 2011.

Electronic City and Hosur Road witnessed only marginal leasing activity during the first quarter.

The North Bangalore micro market is amongst the most preferred destinations for corporate occupiers, however it suffers from lack of quality space which hampers leasing activity in this micro market. High demand amidst low supply scenario led to an increase in rental values by almost 14% q-o-q.

 

 

 

Market Outlook

The outlook for the market remains upbeat for the coming few quarters. Rental values are expected to maintain an upward trend due to increase in demand and lack of availability of quality space in the prime city. The suburbs are also expected to witness an increase in transaction volume with proposed expansion by various corporate occupiers opting for more cost effective suburban Grade A space.

Property prices along Metro route zoom upwards

Till now, only an endless string of complaints were heard from Bengalureans owning property in the vicinity of the Bangalore Metro Rail project. They constantly cribbed about their misery and helplessness as there were no takers for their establishments, either on rent or otherwise.

But now with Namma Metro trains all set to chug into action, the scenario has changed dramatically. It is estimated that property prices in the area are going to go through the roof, especially along Reach-1 which has the plushest destinations en route. Namma City is on the verge of joining the elite list of cities when Reach-1 of the metro project will be completed this year. The areas that are in demand for both purchase and rentals in commercial spaces are all in close proximity to the Metro stations along Reach-1 and the Byappanahalli terminal. Properties along M.G. Road and CMH Road, which were closed for traffic for 2 years, are expected to see a boom in business.

“Since there will be a smooth flow of traffic once the Metro commercial operations start, we are hoping that the establishments on M.G. Road will get back their glory. Also, the road restoration work will help in drawing shoppers to M.G. Road. Property prices in the vicinity of M.G. Road will skyrocket,” said the President of Brigade Road, Shops and Establishments Association (BSEA), Suhail Yusuf.

Shopkeepers are understandably upbeat. Imtiaz Ahmed, president, CMH Road Shops and Establishments' Association said: “This means we could recover our losses of the past 2 years, provided the Metro facilitates parking spaces in the vicinity of CMH Road station.” The current rates for residential properties in the vicinity of metro stations are Rs. 6,000 per sq ft. It is estimated that when Bangalore Metro Rail begins commercial operations there will be an escalation in prices of residential properties nearby. With high demand for accommodation in the vicinity of Reach-1, the rents are also going to rise by 15-20 per cent. “The present rates for commercial properties in the vicinity of metro stations are Rs. 10,000 per sq ft. With the arrival of metro rail, the prices of commercial properties are expected to go up by 15-20%. Currently we are seeing locality-specific growth in prices, driven primarily by completion of infrastructure projects which have improved connectivity,” said the Vice-president and Business Head of Indiaproperty.com, Ganesh Vasudevan.

“The Metro Rail Project, particularly Reach-1, will boost demand for properties in Bengaluru. The connectivity that Reach-1 is providing will encourage high density development in the established residential areas around CMH Road, 100 Feet Road, HAL 2nd Stage, Jeevanbhima Nagar and Ulsoor. Development of new buildings and infrastructure is simultaneously increasing with the arrival of the Metro,” he adds.

GVK to develop Airport City part of BIAL

Airport City at Bengaluru International Airport (BIA) is a canvas that stretches across 4,000 acres of greenfield property, with a potential for about 500 acres of landside development. It is a one-stop business destination envisioned by Bangalore International Airport Limited (BIAL).

Airport City is envisioned to be a new urban entity with business parks, prime offices, hotels, conference centers, shopping complexes, restaurants and entertainment zones. Bengaluru International Airport aims to emerge as an airport destination, which is a center of aviation and non-aviation business, and the nucleus of commercial development in North Bangalore.

Fast emerging as the preferred port of entry into South India, Bengaluru International Airport is already the regional center for commerce and trade. Located in Bangalore, a city hailed as the world’s new economic powerhouse, Airport City is an opportunity that is ready to take off.

Airport City - A glimpse of things to come:

An integrated business district with state –of-the art infrastructure provision

Approximately 500 acres of land available for development

Land available for business requiring airside access

Dedicated water and power infrastructure exclusive to the Airport

Average travel time from the city center: 45 mins

Proposed high-speed rail link that connects the Airport to the city centre in 25 minutes.

Clear property titles; land leased from the Government of Karnataka

Approved ‘Airport Development Plan’ from Bangalore International Airport Planning Authority (BIAAPA)

International Convention Centre to place Bangalore in hall of fame

The State cabinet on Thursday approved development of an International Convention Centre (ICC) near the Bengaluru International Airport (BIA) at a cost of Rs 250 crore, 50 per cent of which is to be funded through budgetary support and the remaining amount will be raised from KIADB.
The proposal for such a centre was made as early as 2007 by the Department of Tourism. Going by that, the ICC, with a capacity to hold 6,000 people, will be built on 35 acres and is aimed at promoting Bangalore as an attractive destination for huge international meets and exhibitions. The government is targeting completion of core components of the project (the convention hall, meeting rooms, exhibition hall and food court) before June next year to host the next edition of the Global Investors’ Meet (GIM) there. There will be 20 meeting rooms with seating capacities varying from 50 to 250 and an exhibition hall with a minimum area of 20,000 sq mt. “Given the infrastructure woes during the previous edition of GIM, we want to have all facilities like food courts and hotels at one place,” an official told Deccan Herald. The ICC is expected to beat competition from Hyderabad and Ahmedabad in hosting international conferences and cashing in on high-profile investors. The Cabinet, in its note, a copy of which is in possession of Deccan Herald, said “Bangalore lacks facilities to attract international and national conferences. Hyderabad, after the opening of the International Convention Centre there, has become the preferred centre”. The note says: “It is necessary to provide other supporting infrastructure such as star hotels, service apartments and theme parks. It is proposed that this be developed through a PPP model.” There is also clearance for any additional land that would be required, besides the 35 acres to be acquired. EC set up Further, the cabinet has proposed to set up an Empowered Committee to oversee the project. The committee will comprise the Chief Secretary (Chairman), Principal Secretary to the Department of Infrastructure Development (Convener), Principal Secretary, Finance, Principal Secretary, Commerce and Industries, Principal Secretary, Tourism, Metropolitan Commissioner, BMRDA, Secretary, Law Department and executive member, KIADB.

Honda to set up third two-wheeler plant in India

Japanese auto giant Honda today said it will set up a third two-wheeler manufacturing facility in India at Narsapuram, in Karnataka, with an installed annual capacity of 12 lakh units by 2013.

The company, which recently exited from the country’s largest two-wheeler maker, Hero Honda, will also double the output of the upcoming second plant at Tapukara in Rajasthan to 12 lakh units by the end of this fiscal.

Honda Motor Co, however, did not mention any investment figure for expanding its business in the growing Indian two-wheeler market.

“In order to realise Honda’s vision to provide good products with speed and affordability, the third plant will be built in the Bangalore area.”

“The third plant is scheduled to become operational in the first half of 2013, with annual production capacity of 12 lakh units,” the company said in a statement.

The company’s wholly-owned subsidiary — Honda Motorcycle & Scooter India (HMSI) — is currently investing about Rs 500 crore for setting up its second facility at Tapukara and it will be inaugurated on June 1 with an initial installed capacity of 6 lakh units a year.

“HMSI decided to double the annual production capacity of this plant to 12 lakh units in March, 2012,” the company said.

“India represents the world’s second largest motorcycle market behind only China and industry-wide motorcycle sales in India for 2010 reached 1.13 crore units (up 30 per cent compared with 2009).

“HMSI’s sales have grown steadily, with 2010 sales of approximately 15.26 lakh units (up 40 per cent compared to 2009), achieving a record high for 10 consecutive years,” the company said.