Market Review - Bangalore
Known for its vibrant office space market, Bangalore has consistently topped the absorption charts in the past few years. The IT/ ITeS industry which dominates and drives demand in the market continues to thrive and grow, albeit at a slower pace in the face of a global economic slowdown. The fact that the city is home to over 2000 STPI registered companies and employs over 0.5 million people has evidently proven that Bangalore is a preferred IT destination for setting up of a new unit or expansion of existing operations of IT/ITeS companies. Besides, the government has also taken up several proactive industry friendly policies to promote IT and considers the industry as one of the five top priorities by constituting a national task force on IT and software development.
The slow pace of infrastructural development in the market has long threatened to adversely affect the health of the office market. However, this is yet to affect market growth as the market clocked a strong 29% absorption growth in Q4 2011 over Q4 2010. This indicates an improvement in sentiment as absorption activity usually tapers off during the first and last quarter of the year. Corporates usually execute expansion plans in the April-September period as budgets get finalized at the beginning of this period. The fact that rental growth is displaying signs of stabilizationalso bears testament to the strength of this market.
The weighted average rental value across office micro-markets increased by 5% from INR.38/sq.ft./month during Q4 2010 to INR.40/sq.ft./month in Q4 2011. The average area transacted per deal was observed at 30,898 sq.ft in Q4 2010, whereas in Q4 2011 it was observed to be approximately 29,760 sq.ft.in Q4 2011.
Known for its vibrant office space market, Bangalore has consistently topped the absorption charts in the past few years. The IT/ ITeS industry which dominates and drives demand in the market continues to thrive and grow, albeit at a slower pace in the face of a global economic slowdown. The fact that the city is home to over 2000 STPI registered companies and employs over 0.5 million people has evidently proven that Bangalore is a preferred IT destination for setting up of a new unit or expansion of existing operations of IT/ITeS companies. Besides, the government has also taken up several proactive industry friendly policies to promote IT and considers the industry as one of the five top priorities by constituting a national task force on IT and software development.
The slow pace of infrastructural development in the market has long threatened to adversely affect the health of the office market. However, this is yet to affect market growth as the market clocked a strong 29% absorption growth in Q4 2011 over Q4 2010. This indicates an improvement in sentiment as absorption activity usually tapers off during the first and last quarter of the year. Corporates usually execute expansion plans in the April-September period as budgets get finalized at the beginning of this period. The fact that rental growth is displaying signs of stabilizationalso bears testament to the strength of this market.
The weighted average rental value across office micro-markets increased by 5% from INR.38/sq.ft./month during Q4 2010 to INR.40/sq.ft./month in Q4 2011. The average area transacted per deal was observed at 30,898 sq.ft in Q4 2010, whereas in Q4 2011 it was observed to be approximately 29,760 sq.ft.in Q4 2011.
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