India Focus: Bangalore market stable

If there is one redeeming factor in the Bangalore real estate scenario today, it is commercial property.

Prices have remained stable over some time now and are expected to remain so, thanks to a variety of reasons.

Unlike most cities, Bangalore is still in a transitional stage with plenty of potential for lateral growth. This has attracted both the Government and the Indian and multi-national business houses who have made substantial investments in the city.

Global majors have found it a wise choice to move their back office units to Bangalore, not just because it is the IT capital of the country, but for the cheaper and superior human resources and low operating costs.

The government has taken the decision to allocate nearly 100 acres near the city to the IT biggie, Infosys for its second campus.

Apar Technologies Ltd., a leading offshore development company, is setting up its second offshore development centre here, in addition to the company's existing infrastructure of over 50,000 square foot in Mumbai and here.

Another IT firm, Cyber Works, has leased furnished space off Airport Road, and Celstream Technologies took on lease 6,000 square foot office space in Silicon Terraces on Hosur Road, recently.

Tata Teleservices also pitched in their bit by leasing 7,000 square foot of retail premises on Richmond Road.

Satyam Computer Services has leased 24,000 square foot at Brigade Square on Cambridge Road and Transworks has leased 20,000 square foot in Prestige Blue Chip on Hosur Road.

According to a recent report published by an international property consultant, it is not the IT sector alone that is contributing to the stability in the commercial property space in the city.

The other sunrise industry, biotech is also helping. India Builders Corporation, a local developer has set in motion an over-one million square foot state-of-the-art facility, to be known as IBC Knowledge Park here.

The Park has been designed to cater to not just IT and IT-enabled services, but also hardware design, pharmaceuticals and biotech.

Saint Life, a new pharmaceutical research and development outsourcing firm is planning a 35,000 square foot facility at Whitefield.

The other Indian pharma major, Dr. Reddy's Laboratories has acquired as much as 20 acres of land in Electronic City, off Hosur Road, for its second research and development laboratory here.

Then, there are the others like the German automobile manufacturer, BMW, who is planning to set up a software support centre and manufacturing base for critical auto components in Bangalore.

And, there are the setbacks like HP, after its merger with Compaq, has decided to close its only manufacturing unit in Bangalore. Compaq, however, continues with its facility in Yeshwanthpur. Most of these companies prefer their properties in the suburbs like Whitefield, Electronic City on Hosur Road, Koramangala, J.P. Nagar and R. T. Nagar.

Central Business District investment and properties, like the one on Richmond Road, are hard to come by, even though property prices have hovered around Rs4,750 per square foot.

This is about five per cent lower than what was being quoted about six months ago. A couple of kilometres away, the prices could come down by about a thousand rupees per square foot and yet another thousand in the suburbs.

However, the IT concentrated areas like Hosur Road and Whitefield have a higher price range at about Rs4,000 per square foot.

Yet, given the various factors in the Bangalore property market - the quick infrastructure development and a forward-looking government - commercial property prices have the possibility of moving up, but, as another real estate consultant put it, "These prices are not going anywhere in a hurry."