Commercial in Bangalore, on the waves again

With Bangalore making rapid strides in IT/ITES sector, the office space absorption here has reached a new high of 14.2 million sq ft, which is believed to be the second highest in the world after Tokyo.

This is accountable for 53% growth over the past years. The office space absorption figure is known to stand at 9.28 million sq.ft thereby carving out a niche among the top four cities globally. With IT/ITes majors being bullish to set establishments in Bangalore, the city is likely to figure in the top cities globally in office space absorption in 2007, says the data showcased DTZ Debenham Tie Leung, an international real estate consultancy firm.

Bangalore’s CBD is fetching Rs 65 per sq ft per month, with a further rise to come up soon in very near future in the wake of new supply. The vacancy level in CBD is just 0.5% against 7% - 8% of other peripheral locations in the city. It is likely to remain unchanged due to the huge pipeline supply.

Indeed, NCR could not make it to win the race. The Capital has seen an overall absorption of 10.6 million sq ft of commercial Grade A office space in 2006, says the survey. Rentals in the city will continue to rise due to the MCD sealing of illegal commercial spaces. Another reason can be the steady demand by the upcoming companies in NCR.

According to the survey, the total office space absorption in Mumbai was estimated to be 6.4 million sq. ft. the demand for commercial spaces in Mumbai may continue to by expanding IT/ ITes, insurance and telecom sectors. The rentals in the most sought after locations in Mumbai such as Bandra, Worli, Lower Parel are almost 100-200% higher than the rentals in 2006. As such, the rentals in financial capital have not jumped very high.

Rentals across these cities have more or less remained stable and have not shown significant appreciation, said the report.

The office absorption in Chennai in the last quarter of 2006 stood at 5.2 million sq. ft., whereas the total absorption in other upcoming cities including Pune and Hyderabad stands at 4.6 million sq ft and 3.8 million sq ft, respectively.