Financial Daily from THE HINDU group of publications
Thursday, Nov 11, 2004
Industry & Economy
Real Estate & Construction
Chennai, Pune turn real estate hot spots
Bangalore , Nov. 10
CHENNAI and Pune are emerging as new real estate hotspots and will see the biggest growth in commercial real estate development and demand in the coming 12-18 months, driven by the influx of ITES/BPO companies into the country.
Bangalore, however, is still the top draw, along with Gurgaon, and will continue so as long as capacity creation and infrastructure keeps pace with the demand.
"About 50-60 million sq ft of space will be ready in Bangalore in 18-24 months and much of that will be taken up in the same time, although Pune and Chennai rank next in terms of demand," feels Mr S.N. Nagendra, General Manager, Karnataka and Goa, HDFC.
Capacity creation is on at Pune and Chennai, too, to meet expected demand.
Many developers will have 2-3 million sq ft of space ready in the next 12-18 months in these two cities mostly at the cost of infrastructurally bedevilled Bangalore, say financiers.
ITES/BPO companies account for 70-80 per cent of the total uptake expected next year.
These are mostly large banks, insurers and telcos outsourcing their operations to India.
About 4 million sq ft of commercial real-estate, campus-styled, `warmshell' (building with power back-up and air-conditioning in) spaces in suburban business districts will be taken up by many of the 150 US companies surveyed by Equis Corp, according to Mr S. Rao, Vice-President, Asia-Pacific.
About 200 million sq ft will be taken up in five years by new BPOs, concluded NAI, a $27-billion real estate company that recently set up Indian operations.
About 20 million sq ft will be needed annually, according to Mr Shahed Ahmed, Managing Director, NAI Sites and Services, the India partner for the consultancy.
Investors are looking to make multi-billion dollar FDIs into the real-estate market, but the market needs `single-window clearance' type of State Government support, especially for satellite townships, he said.
Mr Rao says that Lucknow, Jaipur and Ahmedabad are seeing rapid real estate development activity as existing ITES/BPO firms look to expand their operations into other cities to scale up, while keeping costs down.
ITES companies are also setting up facilities at Vadodara, Goa and Kolkata, says Mr Juggy Marwaha, Head-Commercial Marketing, RNZ Group, a large builder with clients such as Intel, Reuters, H-P and Broadcom.
Delhi (including NCR), Mumbai, Bangalore and Chennai are the largest and fastest growing real estate markets, says Ms Manisha Grover, Associate Director, Jones Lang LaSalle India.
"Peripheral locations and secondary business hubs are in focus: Areas such as Malad and Andheri in Mumbai; Gurgaon and Noida in Delhi; Bannerghatta Road and Outer Ring Road in Bangalore, and the Old Mahabalipuram Road in Chennai."
Next year will see about 5.1 million sq ft in Bangalore become available while New Delhi (3.4 million sq ft), Mumbai (2.8 million sq ft) and Chennai (1.9 million sq ft) follow suit as real-estate homes on account of the BPO boom.
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