Bangalore office rentals move up in the third quarter | INRnews
Prime office properties in Bangalore are located in CBD, SBD and Whitefield, Electronic City, Outer Ring Road (ORR) in PBD. Presently, ORR and Bannerghatta Road are witnessing a boom in real estate market.
As expected, Bangalore office market saw an addition of around 0.6 million sq ft Grade A fresh supply during Q3_07. Electronic city, Bannerghatta Road, EPIP Zone/ Whitefield & Hosur Road were the prime contributors in this new supply. CBD also received a supply of around 0.025 million sq ft Grade A space.
With continued wave of construction activity in office segment, next quarter would possibly bring in a supply of around 1.5 million sq ft Grade A space, spread across most of the submarkets says Colliers International.
Bangalore saw new corporates entering the market and many existing ones going in for expansion. Thus, the demand remained consistent from IT companies, Banks, FII's among others. Contrary to the previous trend, a shift in demand has been observed towards Hosur Road & Whitefield. Hosur Road, which had seen very little absorption for past some time is seeing renewed interest, primarily due to shortage of supply & continuous hike of rentals in south Bangalore.
The vacancy rate in CBD further dropped down to 1.5%, with organisations taking up whatever new supply came in this quarter. Hosur Road & Whitefield also witnessed a drop of 2-3% QoQ in vacancy levels; thus hovering between 10- 12%. This might be due to the demand shift observed towards these submarkets. In other areas like ORR, Bannerghatta Road & Electronic city, the vacancy rate remained between 4 - 8% during this quarter.
High demand for Grade A spaces resulted in further hike of rental & capital values across Bangalore office market. CBD saw an increase of 9% in rentals with limited fresh supply addition. In Bannerghatta Road, Electronic city & Outer Ring Road, the rental values went up by around 3 - 9% since last quarter. Owing to high demand, increased interest from tenants & comparatively lesser rentals; Hosur Road & Whitefield witnessed a significant increase of 10 – 17% in rental values since Q2_07.
The new master plan for the city has opened up unexplored areas for future development. In the western zone the government plans to let out more than 1000 acres of space for IT development. Moreover, the state government has given nod for setting up 11 integrated townships in the city which would add lot of IT space in the market. The capital and rental values are expected to move up at a steady rate. However with constant demand, Hosur road & Whitefield might witness significant increase in values says Colliers International.
Colliers International (India) provides property services to property Investors and Occupiers, delivering customised service solutions utilising local and global knowledge via its property Investment and Occupier service lines. These service lines include - Corporate Real Estate, Facilities Management, Land Sales, Office Leasing, Project Management, Residential, Retail, Sales and Investments,Valuation and Consulting Services.
By INRnews Correspondent