Office segment to see supply of 1.5 mn sq ft

With the continued wave of construction activities in Bangalore's office real estate segment, the next few quarters is likely to see a supply of around 1.5 million square feet of Grade A space.

Of the 1.5 million square feet, Electronic City is likely to see 33 per cent of the space, Bannerghatta Road 25 per cent, EPIP zone/Whitefield 17 per cent, Hosur road 13 per cent, Outer Ring road 8 per cent, and central business district (CBD) 4 per cent.

According to Colliers International's 'India Property Market Overview', contrary to the previous trend, a shift in demand has been observed towards Hosur Road and Whitefield. Hosur Road, which had seen very little absorption for the past few months is seeing renewed interest, primarily due to a shortage of supply and the continuous hike of rentals in south Bangalore."

Also, the city is witnessing new corporates taking up space and many of the existing ones going in for massive expansion. But, demand remains consistent from IT companies, banks, FIIs among others.

The high demand for Grade A spaces has resulted in further hike of rentals and capital values across the city. CBD saw an increase of 9 per cent in rentals with a limited fresh supply addition. On Bannerghatta Road, Electronic city and Outer Ring Road, the rental values went up around 3-9 per cent for last few quarters.

Owing to the high demand, and increased interest from tenants and comparatively lesser rentals, Hosur Road and Whitefield witnessed a significant increase of 10-17 per cent in the rental values from the second quarter of 2007.

A new master plan for Bangalore city has opened up unexplored areas for future development. In western zone, the government plans to let out over 1,000 acres for IT development, Samira Chandra Gupta, Regional Director, Colliers International.

"Also, the state government has given the nod for 11 integrated townships in the city which would add a lot of IT space in the market. The capital and rental values are expected to move up at a steady rate. However, with a constant demand, Hosur Road and Whitefield might witness significant increase in values," she added.