Which are the most ex­pen­sive IT cor­ri­dors in ma­jor In­dian cities?

Hindustan Times (Chandigarh) - Estates - - 3 - Ramesh Nair ht­es­tates@hin­dus­tan­times.com

In­dia is touted as one of the big­gest IT des­ti­na­tions in the world, and it was one of the first coun­tries to ben­e­fit from the out­sourc­ing trend that orig­i­nated in the early 1990s. With a sig­nif­i­cantly large English-speak­ing work­force and tech­ni­cally skilled man­power avail­able at rel­a­tively af­ford­able costs, In­dia rose to fame as an off­shoring hub. The term ‘Ban­ga­lored’ - coined for the coun­try’s pre­ferred off­shoring des­ti­na­tion - re­flects the global im­pact of In­dia’s IT in­dus­try.

With rev­enues of around $160 Bil­lion and the IT in­dus­try un­der­go­ing trans­mu­ta­tion from low­value off­shoring pro­cesses to high-end an­a­lyt­ics func­tions, it is a good time to look at some key of­fice cor­ri­dors that have be­come syn­ony­mous with our IT in­dus­try.

IN­DIA’S IT COR­RI­DORS

Re­flect­ing the huge de­mand that comes from tech­nol­ogy oc­cu­piers, both global and do­mes­tic, ap­prox­i­mately 70% of In­dia’s com­mer­cial Grade A stock com­prises of IT and SEZ de­vel­op­ments. Each of the ma­jor 7 cities is has prom­i­nent IT cor­ri­dors that are pre­ferred des­ti­na­tions for the IT in­dus­try.

BAN­GA­LORE

With 92 mil­lion sq. ft. of IT-spe­cific real es­tate in­ven­tory in the mar­ket, Ban­ga­lore takes top spot as one of the lead­ing IT des­ti­na­tions. Ac­count­ing for the pres­ence of more than 35% of all IT com­pa­nies in In­dia, in­clud­ing a mix of multi­na­tional firm back of­fices, cap­tive back of­fices and In­dian tech gi­ants, the city is un­doubt­edly the largest con­trib­u­tor to the IT mar­ket in terms of space take-up.

Ma­jor IT cor­ri­dors in Ban­ga­lore in­clude the en­tire Outer Ring Road (ORR) cor­ri­dor and White­field. ORR is the most ex­pen­sive cor­ri­dor, with rentals go­ing up to $1.24 per sq. ft per month, ow­ing to its good road in­fra­struc­ture, well-es­tab­lished res­i­den­tial catch­ments in the vicin­ity and well as in­no­va­tive in­fra­struc­ture such as a sig­nal-free cor­ri­dor.

There is a lot of fo­cus on in­fra struc­ture de­vel­op­ment in this mi­cro-mar­ket, mak­ing it a go-to lo­ca­tion for IT firms.

A lack of sup­ply with sus­tained de­mand has en­abled land­lord-favour­ing mar­ket con­di­tions, and this cor­ri­dor is bound to see rents grow­ing fur­ther.

DELHI-NCR

The Delhi – NCR IT cor­ri­dor has Cy­bercity and Sohna Road, in ad­di­tion to Noida where most of the IT in­dus­try is con­cen­trated. While the av­er­age rentals for most of the lo­ca­tions range be­tween $0.62-0.93 per sq. ft. per month, DLF Cy­bercity is the most ex­pen­sive mar­ket with rents trending at $1.7 per sq. ft. per month.

Cy­bercity has 13.4 mn sq. ft. of qual­ity of­fice stock con­trolled by a sin­gle land­lord, giv­ing the en­tire mar­ket a cam­pus-style en­vi­ron­ment.

It has ex­cel­lent con­nec­tiv­ity via NH-8 to and from Delhi, as well as mul­ti­ple in­fra­struc­ture ini­tia­tives to curb peak hour con­ges­tion – Rapid Metro, 16-lane ex­press­way, good traf­fic man­age­ment and con­trol, pu­bic park­ing spa­ces and walk­ways be­tween build­ings to re­duce pedes­trian move­ment on roads. The mar­ket also has ex­cel­lent sup­port re­tail.

It is one of the most ex­pen­sive F&B high streets, and is a des­ti­na­tion of choice for pro­fes­sion­als and res­i­dents.

HY­DER­ABAD

Hitech City is Hy­der­abad’s most ex­pen­sive IT cor­ri­dor and has re­mained the most sought-af­ter lo­ca­tion for IT/ ITeS firms due to its ex­cel­lent ecosys­tem, qual­ity Grade-A of­fice spa­ces, large floor plates and pres­ence of a com­bi­na­tion of Non-IT, STPI and SEZ spa­ces. With well-rounded de­vel­op­ment, it ex­hibits a per­fect blend of res­i­den­tial projects, up­com­ing re­tail malls, ho­tels, of­fice spa­ces and ex­hi­bi­tion cen­tres.

With most of­fice projects here op­er­at­ing on a pure lease model, pri­vate eq­uity funds have been ac­tive in trans­act­ing large-sized projects. Other ma­jor IT cor­ri­dors for Hy­der­abad are Gachi­bowli, Nanakramguda and Raidurg, all with av­er­age rentals of $0.70-0.80 per sq ft per month.

MUM­BAI

In Mum­bai, the western sub­urbs cor­ri­dor is the most ex­pen­sive IT mar­ket with rentals trending at $1.3 per sq. ft per month.

Large multi-na­tional firms pre­fer this lo­ca­tion to set up busi­ness pro­cess­ing units and cap­tive back of­fices. This is be­cause it of­fers easy ac­cess to tal­ent, and ex­cel­lent so­cial in­fra­struc­ture with prox­im­ity to malls and res­i­den­tial catch­ment ar­eas adding to the at­trac­tive­ness of this lo­ca­tion. The up­com­ing metro line will en­able greater con­nec­tiv­ity in this cor­ri­dor and as a re­sult, rentals are see­ing a steep up­ward trend of over 10-12% year on year.

Other IT cor­ri­dors in­clude the Thane and Navi Mum­bai belt with pep­pered sup­ply across the Eastern Sub­urbs. Navi Mum­bai, which is an al­ready es­tab­lish cor­ri­dor, is ex­pected to be­come one of the most sought-af­ter des­ti­na­tions in the fu­ture. With large floor plates, ease of ac­cess, mar­ket rentals as low as $0.70 per sq. ft per month and am­ple SEZ and non SEZ stock, it is ideal for large­for­mat IT parks.

KOLKATA

The districts of Sec­tor V in Salt Lake com­mand the high­est rentals rang­ing from $0.54-0.70 per sq. ft. per month. This cor­ri­dor has of­fice build­ings with medium to large size floor plates and is lo­cated close to the main city ar­eas. Th­ese fac­tors, cou­pled with the avail­abil­ity of qual­ity Grade A of­fice spa­ces, cre­ates high de­mand from of­fice oc­cu­piers and thereby re­sults in higher lease rentals as com­pared to Ra­jarhat New Town, which is the other IT cor­ri­dor com­mand­ing av­er­age rental of $0.46-0.59 per sq. ft. per month.

CHENNAI

The OMR pre-toll lo­ca­tion sees max­i­mum trac­tion from the IT in­dus­try, with rentals as high as $1.24 per sq. ft. per month. This IT cor­ri­dor con­sists of Grade A build­ings with easy ac­cess to the city cen­tre.

Prox­im­ity to good so­cial in­fra­struc­ture also helps it to re­main a lo­ca­tion of choice for ma­jor MNC firms.

With lim­ited va­cancy and no new up­com­ing of­fice build­ings in the near fu­ture, the rentals in this cor­ri­dor are ex­pected to rise.

PUNE

Pune is a pop­u­lar IT lo­ca­tion due to the avail­abil­ity of a large tal­ent pool reg­u­larly emerg­ing from the city’s many ed­u­ca­tional in­sti­tutes.

Kharadi-Hadap­sar is the most ex­pen­sive IT cor­ri­dor in the city, com­mand­ing av­er­age rentals of $1 per sq. ft. per month.

Ex­cel­lent con­nec­tiv­ity and prox­im­ity to so­cial in­fra­struc­ture have been the ma­jor driv­ers for this cor­ri­dor, firmly es­tab­lish­ing it as a des­ti­na­tion of choice.

Low va­cancy cou­pled with a ro­bust de­mand mo­men­tum is driv­ing rental growth here.

Hin­je­w­adi has also emerged as a favoured IT des­ti­na­tion, sup­ported by gov­ern­ment pol­icy pro­mot­ing cam­pus de­vel­op­ment and its rel­a­tively af­ford­able rents. Firms pre­fer to en­ter into longterm lease agree­ments in this cor­ri­dor.

CON­CLU­SION

The tal­ent abun­dance in the large cities has been the pri­mary rea­son for the IT in­dus­try to flour­ish, with the avail­abil­ity of qual­ity real es­tate and sup­port in­fra­struc­ture be­ing of equal im­por­tance to IT oc­cu­piers.

In­dia’s strength as an out­sourc­ing des­ti­na­tion will re­main in­tact as it con­tin­ues to churn out skilled en­gi­neers and in­dus­try-com­pat­i­ble grad­u­ates.

Th­ese firms will also be able to af­ford the slightly higher rents in es­tab­lished IT cor­ri­dors.

In­creas­ing real costs are re­sult­ing in cre­ation of newer IT cor­ri­dors within the larger cities as well, with de­vel­op­ment mov­ing fur­ther away from the city cen­tres for off­shoring oc­cu­piers. The au­thor is CEO & Coun­try Head,

JLL In­dia

PHOTO/HT

DLF Cy­bercity has ex­cel­lent road con­nec­tiv­ity via NH­8 to and from Delhi

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