Which are the most expensive IT corridors in major Indian cities?
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 manpoweravailableatrelatively affordable costs, India rose to fame as an offshoring hub. The term‘Bangalored’- coinedforthe country’s preferred offshoring destination - reflects the global impact of India’s IT industry.
With revenues of around $160 Billion andtheITindustryundergoing transmutation from lowvalue offshoring processes to high-endanalyticsfunctions, it is a good time to look at some key office corridors that havebecome 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.
With 92 million sq. ft. of IT-specific real estate inventory in the market, Bangaloretakestopspot 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 includetheentireOuterRing Road (ORR) corridor andWhitefield. ORR is the most expensive corridor, withrentals goingupto $1.24 per sq. ft per month, owing to its good road infrastructure, well-established residential catchments in the vicinity and wellasinnovativeinfrastructure 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.
Alackofsupplywithsustained demandhasenabledlandlord-favouring market conditions, and this corridor is boundtoseerents growing further.
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, DLFCybercityisthemost 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 curbpeakhourcongestion – Rapid Metro, 16-lane expressway, goodtraffic management and control, pubic parking spaces and walkways between buildings to reduce pedestrian movementonroads. Themarket also has excellent support retail.
It is one of the most expensive F&Bhighstreets, andisadestination of choice for professionals and residents.
Hitech City is Hyderabad’s most expensive IT corridor and has remained the most sought-after location for IT/ ITeS firms dueto its excellent ecosystem, quality Grade-Aoffice spaces, large floor plates andpresenceofacombination of Non-IT, STPIandSEZspaces. With well-rounded development, it exhibits aperfectblendof residential projects, upcoming retail malls, hotels, office spaces and exhibition centres.
Withmost 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, NanakramgudaandRaidurg, all with average rentals of $0.70-0.80 per sq ft per month.
In Mumbai, the westernsuburbs corridor is the mostexpensiveIT market with rentals trending at $1.3 per sq. ft per month.
Large multi-national firms prefer this location to set upbusinessprocessingunitsandcaptive back offices. This is because it offers easy access to talent, and excellent social infrastructure with proximity to malls andresidential catchment areas adding to the attractiveness of this loca- tion. The upcoming metro line will enable greater connectivity in this corridor and as a result, rentals areseeingasteepupward trendofover10-12% yearonyear.
OtherITcorridors include the Thane and Navi Mumbai belt with peppered supply across the Eastern Suburbs. NaviMumbai, whichisanalreadyestablishcorridor, is expected to become one of the most sought-after destinations in the future. With large floor plates, ease of access, marketrentalsaslowas$0.70 persq. ft per month and ample SEZ and nonSEZstock, it is ideal for largeformat IT parks.
The districts of Sector V in Salt Lakecommandthehighestrentals rangingfrom$0.54-0.70 persq. 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 andtherebyresults in higher lease rentals as compared to RajarhatNewTown, whichisthe other IT corridor commanding averagerentalof$0.46-0.59 persq. ft. per month.
The OMR pre-toll location sees the maximum traction from the IT industry, with rentals as high as$1.24 persq. ft. permonth. This IT corridor consists of Grade A buildings with easy access to the city centre.
Proximity to goodsocial infrastructurealsohelpsit to remaina location of choice for majorMNC firms.
With limited vacancy and no newupcomingofficebuildingsin thenearfuture, therentals inthis corridor are expected to rise.
PuneisapopularITlocation due to the availability of alargetalent poolregularlyemergingfromthe city’s many educational institutes.
Kharadi-Hadapsaristhemost expensive IT corridor in the city, commanding average rentals of $1 per sq. ft. per month.
Excellent connectivity and proximity to social infrastructure havebeenthemajordrivers for this corridor, firmlyestablishing it as a destination of choice.
Low vacancy coupled with a robust demand momentum is driving rental growth here.
Hinjewadihasalsoemergedas a favoured IT destination, supportedbygovernmentpolicypromotingcampusdevelopmentand its relatively affordable rents. Firms prefer to enter into longtermleaseagreementsinthiscorridor.
Thetalentabundanceinthelarge cities has been the primary reasonfortheITindustrytoflourish, with the availability of quality real estate and support infrastructure being of equal importance to IT occupiers.
India’s strength asanoutsourcing destination will remain intact asit continuestochurnout skilled engineers and industrycompatible graduates.
Thesefirmswill also beable to afford the slightly higherrentsin 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.
Realestateactivityinthewestern suburbs has increased substantially in the recent decadesdueto the establishment of commercial office complexes in the AndheriGoregaon-Maladbelt. Enhanced connectivity via the Western Express highway helped in the region’s development as a key office market of the city.
Withtheimprovingsocialfabric of theregion, massiveresidential developments have cropped up in these areas. Presently, the westernsuburbs’housingsupply accounts for around 44% of the total addition in Greater Mumbai, and nearly 13% of the entire MMR. Reputed developers such as Oberoi Realty, Lodha Group, Acme Housing and Omkar Realtors, among many others, have residential developments in the western suburbs.
Concurrently, the central suburbsalsogrewrapidlyasasignificant amount of industrial land was converted for residential purposes. Initially, locations such as Ghatkopar, Powai and Mulunddevelopedasmajorresidential areas in the central suburbs. In fact, Powai has evolved as one of the posher locations of the central suburbs due to the presence of the Hiranandani
Kanjurmarg has excellent connectivity with the business districts of Thane, PowaiandBKCas well as South Mumbai via LBS road, JVLR, Eastern Express highway, SCLR and the Eastern freeway. It is also well-connected via the central line of Mumbai suburbanrailwaynetwork. Over thetime, conversionofindustrial land has helped in unlocking a treasure trove of land parcels for residential developments.
Theselandparcelswerepreviously occupied by companies suchasCromptonGreaves, Echjay Forgings, Exide industries, Wheelabrator Alloy Castings, etc.
Abundant social infrastructure is another factor that has helped Kanjurmarg’s evolution as a residential hotspot in the city. Proximity to Huma Mall, R-CityMallandthehighstreetsof Powaiprovidemassiveshopping and entertainment options for
DLF Cybercity has excellent road connectivity via NH8 to and from Delhi