The CB Richard Ellis Bangalore Office Market Brief

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The dynamic market movement witnessed in the last quarter continues into the first quarter of 2001.  More than 1.1 million sq. ft. of commercial space will be ready for occupation during the second and third quarters of 2001 due to the fact that buoyancy in the real estate industry during the last quarter of 2000 led many new projects to be commissioned.  However, the market continues to face the problem of non-availability of Grade A ready to move in space.  The impact of IT slowdown has not yet been felt as most IT firms holding steady and non-IT segments including financial sector services companies like Banks and Insurance companies, Call centers and Biotechnology companies contributing a sizeable amount toward the activity in the real estate market during the first quarter. The retail sector is the other industry that we feel would capture the limelight in the near future.


CENTRAL BUSINESS DISTRICT Though completion of ongoing construction projects would make available approximately 300,000 sq. ft of space ready for possession by the end of the second quarter we do foresee the market continuing to face a shortage of supply in the CBD area.  No relief in the quarter has been movement of Deutsche Software, Samsung and Novo Nordisk into larger locations in the CBD and non-CBD areas and the commercial space thus vacant meeting the immediate requirement of various corporate houses in Bangalore. 


Notable transactions in this quarter included; Novo Nordisk and Standard Chartered Bank leasing the space formerly occupied by Deutsche Software in Raheja Towers on MG Road, ICICI Prudential leasing 2000 sq. ft in Vayudooth Chambers on MG Road, Epson leasing 1600 sq. ft in Prestige Meridian-1 on MG Road, L & T leasing 18000 sq. ft in an Independent Building on Church Street, HDFC Standard Life leasing 2900 sq. ft in Embassy Classic on Vittal Mallya Road, Maruti Udyog Limited purchasing 4500 sq. ft in Embassy Classic on Vittal Mallya Road and Star TV leasing 4600 sq.ft in HMG Ambassador on Residency Road.


Non-CBD Areas Commercial space in Non-CBD areas that have been leased out by various corporate houses, have either been occupied or are in the final stages of completion of the fitouts.  The non-CBD area is still preferred due to the relatively lower cost of occupancy and better access to the city center and main residential areas.  Commercial complexes such as the Leela Galleria, Diamond District, Carlton Towers, Oxford Towers have been in the forefront with all or most of the space been leased out by corporates.  Currently, commercial space is available only at Diamond District.  The construction of a built to suit facility of 200000 sq. ft for Intel’s corporate office has just commenced and is situated on Airport Road.


Notable transactions include; National Semiconductors leasing 25148 sq. ft at The Leela on Airport Road, Uday Home Appliances leasing 10000 sq. ft at Brigade Plaza in Gandhinagar, Vam Organics leasing 24000 sq. ft in SJM towers on Seshadri Road, TCS leasing 124000 sq. ft in SJM Towers on Seshadri Road, Motorola leasing 55000 sq. ft in Diamond District on Airport Road and Venkatraman Associates leasing 5500 Sq. ft in Adarsh Regent on Koramangala Ring Road, Manvish Info Tech Pvt. Ltd leasing 11500 sq.ft in an Independent Building on K H Road and Samsung leasing 75000 sq.ft in Geneva house on Cunningham Road.


SUBURBAN & PERIPHERAL AREAS Though many IT companies have deferred their plans of acquiring property for their campus style facilities, the peripheral areas of Bangalore still remain hot for various MNC’s and corporates who are keen on acquiring approximately 4-10 acres either for building their campus style facilities or consolidating their operations.  Phase-II of Electronic City on Hosur Road is currently seeing a lot of development with corporates like Infosys acquiring space in this project with ITPL at Whitefield.  The availability of infrastructure, with regard to the condition of the roads and accessibility to neighboring townships, have given a sense of security to companies looking to move into the peripheral location. Telecom connectivity is also set to improve with OFC cabling nearing completion right across Bangalore.


One mega project in the offing is the plan of Prestige Group to develop a state-of-the-art retail complex cum entertainment center in Koramangala, one of the prime high spending catchment areas of Bangalore.  The project set to international standards of product mix and design and conceived by a highly professional group of professionals would address the retailing requirements of progressive domestic users and international retail chains. The construction of this project is scheduled to commence during the second quarter of 2001.


Notable transactions include; Phoenix Global Solutions leasing 10000 sq. ft in an Independent Building in Jayanagar, Wipro leasing 82000 sq.ft in an Independent Building on Hosur Road, Solar Automobiles leasing 8000 Sq. ft in an Independent Building in Rajajinagar, LIC leasing 8000 sq. ft in an Independent Building in Rajajinagar, Adamya Software leasing 16000 sq.ft in an Independent Building in Rajajinagar, Educom Datamatics Ltd leasing 9900 sq.ft in an Independent Building in Koramangala, BPL Innovations leasing 7000 sq.ft in an Independent Building in Koramangala, Dell Computers leasing 50000 sq. ft at Prasad Infotech in White field, Info Pro Systems leasing 9000 sq. ft at an Independent Building in Koramangala, Mahindra BT purchasing 20000 sq. ft at an Independent Building in Koramangala, Novell leasing 10000 sq. ft in an Independent Building on Richmond Road, Axes purchasing additional space at Prestige Blue Chip on Hosur Road.


Looking ahead, the finalization of the International Airport to be commissioned at Devanahalli will act as trigger for the development of north Bangalore and the area designated as the IT corridor will witness development of campus style facilities of many MNCs over the next couple of years. More, the movement of corporates to larger facilities, would increase availability of fitted out commercial space in CBD in the next two quarters and should address the immediate needs of companies looking for ready to move in space.


The global IT slowdown has resulted in the deference of few decisions related to real estate expansions.  However the real estate industry continues to look optimistic in the hope that this is a part of a business cycle and IT industry demand will climb after this temporary dip.  Besides, Bangalore with its availability of talent and improved facilities would continue to attract the IT industry.  Hence we believe that real estate activity would pick-up by the end of the third quarter of 2001 and that would more than make up for the reduced activity witnessed during the end of this quarter. We also foresee, real estate prices which have stabilized going up by the end of the next quarter.




Micro market

Quoted Rent Rent Mar 2001 In Rs. Psf pm

Equivalent Net Rent In Rs. Psf pm

Service Charges (for AC, Power back-up & like services)

Total Occupmation Cost in Rs. Psf pm

CBD (A Grade)

55 (50)




CBD (B Grade)

35 (30)




Non CBD (A Grade)

40 (35)




Suburban Areas (B Grade)

20 (18)




Peripheral Areas (B Grade)

15 (12)






Issue BG2 May 01