Bangalore real estate supply exceeds demand

Infrastructure development gets boost after a gap

There is a contradictory trend in the real estate scene in Bangalore. After a long gap, infrastructure development work is picking up. However, speculative start-ups in construction have slowed down. The increase in demand is now restricted mainly to build-to-suit facilities in the suburbs.

According to international real estate consultants Cushman & Wakefield-India's report, Bangalore has unabsorbed stock of over 1.5 million square feet and at least another 2-3 million square feet will be delivered in the next two quarters. This will see the supply exceeding demand by a huge margin.

The Bangalore Metropolitan Region Development Authority (BMRDA) has initiated Rs 36,000 crore worth of infrastructure development projects to ease traffic congestion and improve facilities in and around the hi-tech city.

As part of the plan, two arterial ring roads and five townships will be developed.

The Bangalore Development Authority (BDA) has notified the acquisition of land for the second phase of the Peripheral Ring Road. The move has prompted protests from landowners claiming that the BDA is only duplicating the efforts of Nandi Infrastructure Corridor Enterprises (NICE).

Besides, a Malaysian company has come forward to implement an 18-km long mono rail project from Kanakapura Road to Majestic Junction as a pilot on a BOT basis. The investment for this pilot is estimated at Rs 6,350 crore and work is scheduled to begin on or before August 15, though an agreement is yet to be signed.

"There has been a rapid and visible transformation in development of road infrastructure in the last month and this is expected to continue in all critical and important areas of Bangalore. On the other hand, the demand for office space has been relatively slower in the last two months," said Cushman & Wakefield-India report.

The developer community has also marginally slowed down speculative construction activity and is concentrating on properties that are under construction and build-to-suit properties. The capital and rental values have remained stable across all micro markets except Whitefield, the report added.

Some of the prominent leasing activities in Bangalore during May-June are the Prestige Tech Park (Outer Ring Road) where Nokia has leased 1.25 lakh square feet. Independent Building, Electronic City "� CGI has leased approximately 1 lakh square feet. GR Tech Park, Whitefield "� SAP has leased 1 lakh square feet.

The other major projects being the IBC Knowledge Park, Bannerghatta Road where Rambus has leased 49,000 square feet. RMZ Ecospace, Outer Ring Road where Microland has leased 60,000 square feet.

Investment/sale in Bangalore "� Whitefield "� Prestige Group has acquired 16 acres of land earlier owned by Graphite India. Whitefield "� Prestige Group has entered into a JV deal with Rao Insulating Company who own approximately 20 acres of land here.