The Hindu Business Line : Upswing in Bangalore real estate sector

THE real estate industry in Bangalore enjoyed buoyancy, with the upswing in the economy resulting in a record absorption of commercial space of nine million sq.ft during 2005. The city, which only three years ago had hit a stagnant phase with an unoccupied space of about two million sq.ft, saw the booming IT, ITES companies leasing seven million sq.ft last year.

According to industry sources, the phenomenal increase in demand was due to the technology companies consolidating their office space in one area to bring logistics and transportation costs down and to derive maximum efficiency and competitiveness in business.

Despite severe competition from new destinations such as Chennai, Hyderabad, Pune and other areas such as Gurgaon, Mumbai and Noida, Bangalore held its own to meet the additional demand.

Major developments as new technology companies moved into large-scale campuses in the suburbs also gave a push to demand for residential complexes in the city. This led to property developers embarking upon a further construction of eight million sq.ft of office space during the next year. Of this, 3.5 million sq.ft of space had already been committed by customers, said Mr M.A.Vakil, Chairman of Vakil Housing.

The existing private information technology parks have also begun to add new blocks in their campuses to cater to the rising demand. Mr Vakil said though yields in Bangalore's real estate had declined in the past two years from 14 to 11 per cent, the buoyancy and declining stock of space lent optimism to the market in the New Year. He said another trend during the year was that property developers venturing into Tier II and III cities such as Mysore offered new opportunities to the industry.

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