Date:10/01/2006 URL: http://www.thehindu.com/2006/01/10/stories/2006011016100400.htm

Karnataka - Bangalore

Commercial property market in the city is looking up

Special Correspondent

Locations in and around Whitefield likely to dominate the supply scenario in 2006
First half of 2006 likely to witness lease commitments exceeding three million sq ft

New buildings along the Outer Ring Road preferred

Bangalore: The activity in the commercial property in the fourth quarter of 2005 highlighted a positive outlook.

Based on current latent demand in the market, it appears likely that the first half of 2006 will witness fresh lease commitments exceeding three million sq ft. With strong activity build up in the first two quarters, 2006 may see total lease commitment in the region of 5.5 million to 6 million sq ft. Locations in and around Whitefield are likely to dominate the supply scenario in 2006.

Corroborating this trend, international property management firm Cushman and Wakefield says in its year-end sum-up: "The commercial office market in Bangalore has once again proved its detractors wrong."

In fact, the market performed exceedingly well with an overall estimated absorption of close to 7.5 million sq ft. This compares favourably with the absorption of around 7.5 million sq ft in 2004. That means, the demand momentum seen in the year 2004 continued during 2005.

Moreover, the short-supply situation that prevailed throughout 2004 gradually eased by the fourth quarter of 2005 and the market is currently seeing a demand-supply equilibrium on the overall volume basis.

The geographical distribution of fresh lease commitments made during 2005 shows a clear occupier preference for new buildings along the Outer Ring Road.

This further accentuates the concerns related to accessibility and road infrastructure.

The Ring Road is relatively wider and less congested and also well connected to the new suburbs. However, market observers feel this corridor is likely to remain in a short-supply situation for the next two or three quarters. The significant leasing transactions during 2005 included the Chinese telecom major Huawei planning to lease 900,000 sq ft of office space in Salarpuria Hall Mark on the Outer Ring Road. Cisco Systems leased 200,000 sq ft in the same facility.

Information Technology firm HCL leased around 260,000 sq ft space on a purchase option in Surya Wave, Electronics City.

Fidelity leased 250,000 sq ft in Manayata Business Park on the ORR, in North Bangalore.

With the government making a commitment to improving some of the arterial roads such as Airport Road and the elevated expressway along Hosur Road about to take off, some of Bangalore infrastructure constraints may be corrected this year