Tuesday, November 29, 2005

Bangalore still the top IT site

Bangalore still the top IT site
Business Standard

The results of a recent study of information technology and IT enabled services companies by Trammell Crow Meghraj, international property consultants, threw up no great surprises.

Bangalore, for all its glitches, was numero uno destination for IT/ITES companies in the country, followed by Mumbai. Hyderabad and Pune steamed ahead of Delhi with Chennai and Kolkata bringing up the rear.

The study, which also aimed to gauge the gap between perception and reality in these cities, had heartening news for Chennai and Pune.

Bangalore stood tall across the board and topped each ranking. Perceptions about Pune were more or less in line with what the city offers. Hyderabad turned out to have a much better perception than what it is offering in reality.

Chennai was the exact opposite, offering much more value than perceived to be.

The study of over 100 IT/ITES companies across India was aimed at understanding the location or city preferences of these companies on different real estate parameters.

Out of the companies surveyed across Bangalore, Chennai, Mumbai, Hyderabad, NCR(Gurgaon), Kolkata and Pune, about 42 per cent were multinational companies and the rest Indian, all with an average turnover of $40 million.

Aditi Watve, manager, land and advisory services, Trammell Crow Meghraj, Pune, says, "This apparent contradiction is exactly the biggest finding of the survey. IT/ITES commercial development seems to be the most popular option for development, mostly because of the permissible additional FSI and returns to the tune of 9 to 10 per cent. But in this process, the developers are not necessarily studying what these companies, that is, the consumers, want from the product."

Companies clearly indicated a trend towards preferring integrated townships in an IT/ITES special economic zone. Being in the neighbourhood of other prominent IT/ITES companies was seen as a necessary and important criteria.

Surprisingly, the energy efficient or green building concept did not have many takers, especially among the Indian companies. MNCs ranked this criteria much higher.

Also ready possession, plug and play developments were much more preferred to the build-to-suit, warm shell model used by most of the developers. This was also came up as one of the dampeners of the rate of growth. The average area per person demanded by all these companies is about 63 SFT per person.

Among the other surpirses thrown up by the study, outright ownership was the most important aspect overall. "This led us to believe that Indian companies were dragging the score but when Indian companies and MNCs were analysed separately MNCs also thought of it as the third most important factor. This is to a definite credit to increasing transparency in especially the commercial real estate.

"Overall, if a developer sells real estate to these IT companies, in an SEZ, that has quality residential space nearby, frontage on a prominent city road, i.e., a prestigious address in the city centre, floor plates to the tune of 20,000 to 5000 SFT, plug and play and ready possession, then it is unlikely that the developer will go wrong," says Watve.


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