Indian Real Estate Hotspots

                                                                                         

In a report recently released by Jones Lang LaSalle confirms, Tier III cities of Chandigarh, Kochi, Ahmedabad, Jaipur and Nagpur are fast emerging as the top three IT / ITeS commercial real estate destinations in India. According to the report, Wipro, Satyam, Infosys, IBM, Microsoft, Genpact, Dell are some of the IT / ITeS firms that already have a presence in a number of Tier III cities across India. Creating a wide array of choice, other cities, such as, Mysore, Coimbatore, Lucknow, Visakhapatnam, Indore and Baroda have also started to appear on the radar of IT / ITeS firms.

Further, the report point out that the traditional growth centres (Tier I cities) and transitional Tier II cities have grown from strength to strength, while Tier III cities have begun to fast emerge, as hotspots for the office, retail, residential and hospitality sectors.

Providing cost arbitrage opportunities for off-shoring facilities, though profiles may vary substantially across locations, Tier III cities offer advantages in terms of lower cost of labour and real estate, as the cost of doing business in Tier I and II cities increase.

While, Kochi and Nagpur offer skilled IT / ITeS manpower at relatively higher rates, as compared to other Tier III locations of Chandigarh and Jaipur, availability can depend upon skills-set type required by respective businesses. However, some of these cities, such as, Kochi and Nagpur have a number of colleges and institutions that impart professional education and have high literacy rates, overall. Kochi with a 94% literacy rate and Nagpur at 88%, may provide a larger English speaking talent pool suitable for IT / ITeS businesses.

The report also states, city evaluation factors include, business location attractiveness infrastructure support, governance, cost of living, quality of life, operating costs, etc. etc.

It also points out, the 8% growth of the Indian economy that shows no signs of a slowdown in the short-term, will ensure the demand for office space continues to increase, resulting in low vacancy levels.

As per the report, the weighted average gross rental value in the Central Business District (CBD) and the SBD is expected to continue to rise in the next six months, mainly on account of low vacancies. However, the 1.2-million sq. ft. of expected supply in the SBD in 2007 might trigger stabilisation of rental values in the micro-market.

High streets in Delhi still command the highest rental values, Connaught Place, the NCR CBD, continues to undergo a facelift, in the process attracting many new retailers, leasing spaces at rents as high as Rs. 600 per sq. ft. per month.

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