More IT companies are moving into SEZs as part of their office expansion plans,
After the initial slowdown in the office space market last year,there has been a gradual revival of this sector with corporates going ahead with their expansion plans.The extension of the STPI tax benefit scheme from 2011 to 2014 is seeing an upsurge in the number of IT and ITeS companies moving into special economic zones SEZs).
SEZs spurring growth
Currently,there are 14 operational IT/ITes SEZs in the city with a total of 60 units operating within these campuses,employing around 90,000 totally.Another 35 SEZs have been notified and are expected to employ 4.37 lakh people in their units,according to the Department of Industry and Commerce website.
The availability of large land parcels on the outskirts in north Bangalore,along the Outer Ring Road (ORR),Whitefield,Bangalore-Mysore highway and Electronic City make these localities conducive to setting up SEZs.
Shrinivas Rao,CEO,Vestian Global Workplace Services,says,"The ORR will continue to remain an attractive IT/ITeS growth corridor of Bangalore and improve further with planned completion of numerous flyovers and underpasses between Hebbal and Silk-Board Junction by end of 2011."
Bangalore north is where hectic ITspurred ancillary industrial activity is taking place.Several major projects have been proposed in the region.Karnataka State Industrial Investment and Development Corporation (KSIIDC) owns around 413 acres of land adjoining the Bangalore International Airport of which 300 acres has been earmarked for the Devanahalli Business Park.The park will be developed on BOT basis through the private sector on behalf of the government.Currently,the park is awaiting government approval.
The aerospace SEZ planned across 1,000 acres has received formal approval.Three major manufacturing units will manufacture aircraft engines and aerospace components.The Karnataka Industrial Areas Development Board (KIADB) is developing an exclusive industrial estate on 900 acres for electronics hardware and IT/ITeS sectors,adjacent to the Bangalore International Airport.A large number of IT and electronics hardware units have been given formal approval to set up operations in these industrial areas.
The State Government has decided to set up the Information Technology Investment Region (ITIR) on 10,000 acres with an investment of Rs 1 lakh crore in two or three phases.
The Industrial Finance Corporation of India Limited (IFCI) has proposed to establish a global financial district on 200 acres of land near Devanahalli Industrial with an investment of Rs 1,000 crores.This hub will house corporate arms of all leading banks in India,insurance companies and financial companies that deal with needs of industries.Prospective entrepreneurs wanting to invest in the State would get all clearances for their various needs at this hub,including clearances from bankers.The project would be executed either as a joint venture or a PPP model.
Emerging warehousing and logistics hubs
Bangalore's industry watchers project the city as an emerging logistics hub riding on the success of the ancillary industries created primarily by the IT industry.Anshuman Magazine,Chairman & MD,CB Richard Ellis,South Asia Pvt.Ltd.says,"Presence of SEZs for manufacturing,multi-product and sector-specific SEZs,augmented with improved infrastructure developments and realisation of cost benefits of outsourcing non-core functions such as logistics,will usher in new growth trajectory in the areas around."
Bangalore continued to witness increased market activity in 2010."The industries like supply chain and logistics,and manufacturing,accounted for 20 percent of the total leasing activity witnessed during this financial year in Bangalore,while it was 12 percent for the same period during 2008,indicating that supply chain and logistics,and manufacturing industries are playing a significant role in creating demand for commercial office space,"says Srinivasa Reddy N S,Manager-Research and REIS,Jones Sang LaSalle.
Major automobile manufacturing and auto components manufacturing units are based in Bidadi,Jigani,Anekal,Nelamangala,Bheemahalli and Bommasandra.The emerging logistics belts are Whitefield-Hoskote,Electronics City-Bommasandra,Peenya-Nelamangala,and BIAL-Devanahalli.
In north Bangalore,four logistics parks spread across 140 acres are being developed on a public-private partnership (PPP) basis by the government's Infrastructure Development Department.
Increase in officespace demand
Bangalore remained the most active office market in India with the third quarter of 2010 recording the highest absorption for the year at 3.31 million sqft with precommitted office space absorption recorded at eight lakh sqft.
"The Bangalore market has traditionally shown high office space absorption,with the IT / ITeS sector predominantly driving the office market,"says Sumit Rakshit,Executive Director,Occupier Services,Cushman & Wakefield."Significant to note in this quarter was the growth in size of space take-ups,with multiple one lakh sqft plus transactions.Given that demand is likely to see a continued rise over the next few months and supply continuing to support the demand,the Bangalore office market will maintain stability in values.
