Have no doubts, Bangalore is still India’s IT capital

Have no doubts, Bangalore is still India’s IT capital
Anshul Dhamija | TNN

Bangalore: Bangalore continues to be the number one destination for IT/ITeS companies in the country.
For all those who thought Chennai and Hyderabad were eating into Bangalore’s status as the IT capital of India, here are some facts.
The annual year-end report by global real estate consultants Cushman & Wakefield shows that Bangalore witnessed the highest commercial space absorption in the country of 10.4 million sqft — the highest in the country for the fifth consecutive year. Of that, IT and ITeS companies absorbed 88%, followed by automotive, telecommunications and other sectors.
Leading the way was i-Flex Solution, which absorbed 1,100,000 sqft of commercial space in Whitefield, followed by 350,000 sqft of space each by ABB and ANZ IT in Whitefield and the Marathalli-Sarjapur belt.
Chennai absorbed only 4.1 million sqft of commercial space of the 9.8 million sqft of supply this year, as against its absorption of 6.5 million sqft of space in 2007.
Hyderabad witnessed a whopping 67% drop in commercial space absorption — from last year’s figure of 4 million sqft to only 1.3 million sqft this year. The total supply in the city amounted to nearly 3.8 million sqft.
Mumbai and the National Capital Region (NCR) absorbed 8.5 million sqft and 8.6 million sqft of commercial space in 2008 respectively.
The total commercial space absorption in the country’s main business metros that include Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, NCR and Pune was 36.7 million sqft, which is a 6% increase from last year’s 34.5 million sqft.
“Bangalore & Mumbai were the only two cities that showed an increase in absorption from last year,” reads the C&W report. In 2007 Bangalore absorbed around 10 million sqft of commercial space and in 2006 around 7.2 million sqft.
Meanwhile, commercial rental rates in Bangalore appreciated between 4% and 9% in the peripheral areas and by a whopping 18% in the central business districts.
In comparison, the commercial rental rates in Chennai and Hyderabad dipped by about 5% to 10%.
Commenting on the report Kaustuv Roy, director of tenant strategies and solutions at Cushman & Wakefield said, “The absorption appears to be higher than last year on account of the pre-lease commitments that were signed in 2007. In cities like Mumbai, NCR, Pune and Bangalore, pre-commitments have a large part to play in the supply-absorption dynamics.”
Going forward, with the economic downturn attaining larger than life proportions, the demand for commercial space is likely to be on the downslide.
“This year, the fresh pre commitments have declined as compared to last year and the impact of this will be felt in the space absorption trends during 2009,” said Roy.