South India has pipped the north and west when it comes to commercial real estate. From January to September, almost 50 percent of new office space deals were struck in Chennai, Hyderabad and Bangalore. Thanks primarily to the IT/ITeS sector, commercial real estate in south india is building new blocks towards recovery. Nayantara Rai brings you the findings of the latest report by international property consultant CBRE.
Chennai recorded a 50 percent quarterly growth in the July-September period, with some of the bigger transactions involving properties like the Prestige Palladium in the heart of the city, the DLF IT SEZ, approximately 5 km from the airport; and along the city's upcoming it corridor in Sholin-Ganallur where a contract research firm scope international signed up 96,000 sqft
What's also noteworthy is the appreciation in rentals, rising by 25 percent Y-o-Y and 15 percent-plus Q-o-Q in IT SEZs in localities like Velachary, Perungudi and Poonamallee Road. A similar trend is panning out 20 km away from Chennai's city centre at the upcoming it corridor. CBRE concedes this is not sustainable.
Anshuman Magazine, CMD - South Asia, CB Richard Ellis, said: “This may not be sustainable but the fact is we do expect in some of the areas where the supply is limited and some improvement in demand happens there could be marginal increase in rentals.”
With the end of the political crisis that had paralysed Hyderabad's property market, CBRE has observed a revival, albeit a gradual one from corporates, especially those from the IT sector and back-end offices for financial services. The action is not so much in the popular Banjara and Jubilee Hills, but in the established it corridor of HiTec city and Gachibowli, where rentals have been slowly inching up.
CBRE says Hyderabad has the potential to emerge as the preferred office destination of corporates. But for that, the city's cheaper and upcoming it corridor—comprising Kukatpally, Manikonda and Nana-Kramguda--have to remain competitive against Bangalore, Chennai and Pune.
India's IT capital Bangalore is still the country's largest office market. A few of large deals inked in the July-September quarter include Mercedes Benz and TCS in Whitefield; Bosch at Sarjapur Marthahalli in Outer Ring Road; Accenture at Mysore road and Wipro again at the Outer Ring Road. These are the future growth corridors identified by CBRE.
“The place to watch out is North Bangalore. We are seeing lot of activity, new special economic zones coming in, airport being in close vicinity, I think in next couple of years North Bangalore will see quite a bit of activity,” Magazine said.
And prospects for Bangalore remain bright. In India's largest leasing transaction e-tailing giant Flipkart has signed on the dotted line for a 3 million square foot custom-built campus from local builder embassy. The deal is pegged at Rs 85/sqft. Accenture is believed to be on the lookout for another 1 million sqft.
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