Revival in the Commercial Real Estate markets of Bangalore and Delhi

By Pallavii Pitale

After a gap of global slowdown for almost one and a half year, CRE Market in Bangalore is getting lots of space enquiries now. This revival is resulting in the stability of rents in various areas. Greater availability of grade ‘A’ structures in areas like Airport Rd., Banerghatta Rd., Koramangala, Jaya Nagar, Bellary Rd.and many more in the category of SBD ( Seconday Business District ) and areas like Whitefield, Electronic City and Mysore Rd coming under the category of PBD ( Peripheral Business District ) has left the power of negotiation with the owners/ occupiers of the property whereas the areas in the CBD ( Central Business District ) Category like M.G.Rd, Residency Rd, Cunningham Rd, Richmond Rd, Ulsoor and others are dominated by the developers in the area due to relatively lesser availability of grade ‘A’ structures.

The area requirement in CBDs can vary from 3500 sft – 8000 sft whereas due to more availability and relatively cheaper rents, the area requirements in SBDs and PBDs can range from 8000 sft – 20000 sft and 15000 sft – 30000 sft respectively.

With these increased demands for rented properties in the market and stable income generation out of them, more no. of investors are ready for the investments in Bangalore.

in a recent survey done by FICCI in association with Ernst & Young It has been revealed that Delhi is the most preferred CRE Market over Mumbai

now days.

With massive changes in the overall infrastructure, transportation networks and overall build up for the Common Wealth Games in the national capital region ( NCR ) of Delhi has attracted many corporates here who are willing to develop their business network in the area. Also many are interested investing in the Peripheral Business District areas like Noida and Gurgaon. Especially Noida is attracting many multinationals to set up their back offices in the area. The CRE rates here are more likely to increase due to all these infrastructural changes by the end of 2010.

Adopting the Green initiatives is the trend that has been taken over by many developers in the area. Some of them are also planning to launch their public offerings in order to make money available to complete the projects faster. With these developing situations, more and more government authorities are expected to release various Commercial plots through auctions for the interested developers and investors.

Inspite of the situation, the private equity players and other real estate funds still are preferring residential real estate over commercial one. Foreign investors and are still preferring to invest in available prime commercial properties though.

The yields on the rented CREs in both the above cities are expected to improve this year with more and more people investing in the CRE markets of Bangalore and Delhi.