REALTY CHECK An economy that’s expanding at 9% is creating more wealth and demand for commercial space. While higher interest rates have crimped demand for residential homes as individual buyers hold back, demand for office space is showing no signs of letting up. Capital values in India’s top business centres of Mumbai and Delhi-NCR (Delhi and the National Capital Region) are at similar levels, touch- ing nearly Rs40,000 per sq. ft, while rental values in Delhi-NCR are softer than Mumbai. According to DTZ India’s office market brief for the first quarter of 2007, while rents in Mumbai will continue to escalate in 2007, there may be a possibility of some stabilization in the second half of the year or early 2008, when several office proj- ects will be completed in micro-markets such as the Bandra-Kurla Complex, Goregaon, Andheri (East) and the mill land developments in city’s suburban business district (SBD). And Pune is certainly the IT destination of choice, with at least eight private IT special eco- nomic zones coming up, which will supply grade A IT and IT enabled services (ITES) space in the next three-five years. Hyderabad, too, will benefit from IT and ITES growth. Delhi-National Capital Region Delhi NCR has witnessed an overall absorption of 1.9 million sq. ft of commercial office space in the current quarter, of which 65-70% is accounted by the IT and ITES sector. Mumbai Financial services, pharma and telecom along with the IT and ITES sectors are the key demand drivers. Kolkata Proactive state support has improved the city’s perception in the mind’s of businesses. Pune Hyderabad IT and ITES continues to be the key driver. Demand in 2007 is seen at 5.8 million sq. ft; supply at 9.7 mn. One of the markets where suburban rather than CBD projects are in high demand. Capital values (in Rs per sq. ft) Rental values (in Rs per sq. ft per month) 40,000 30,000 20,000 10,000 0 2002 2003 2006 2005 2004 2007 400 300 200 100 0 2002 CBD: Central business district SBD: Suburban business district PBD: Peripheral business district (Name of companies in bracket) Source: DTZ India 2003 2006 2005 2004 CBD SBD Gurgaon Noida 2007 (IBM Daksh) Noida 250,000 230,000 200,000 120,000 110,000 (Bank of America) Gurgaon (IIntellevate) Noida (Birla Software) Noida (Fiserv) Noida Recent transactions (area in sq. ft) Capital values (in Rs per sq. ft) Rental values (in Rs per sq. ft per month) 40,000 30,000 20,000 10,000 0 2002 2003 2006 2005 2004 2007 2002 2003 2006 2005 2004 2007 400 300 200 100 0 CBD (Nariman Point) SBD (Bandra-Kurla) Suburban (Powai) Off-CBD (Worli) SBD (Andheri-Kurla) Off-CBD (Lower Parel) Suburban (Malad) 89,000 42,000 30,000 (Regus Business Centre) Bandra-Kurla Complex (British Deputy High Commission) Bandra-Kurla Complex (Goldman Sachs) Prabhadevi Recent transactions (area in sq. ft) Recent transactions (area in sq. ft) Capital values (in Rs per sq. ft) Rental values (in Rs per sq. ft per month) 6,000 5,000 4,000 3,000 2,000 2002 2003 2006 2005 2004 2007 2002 2003 2006 2005 2004 2007 70 60 50 40 30 CBD SBD PBD 1,000,000 600,000 250,000 DLF SEZ Phase I, Rajarhat DLF SEZ Phase I, Rajarhat (IBM) (Genpact) (TCS) Omega Block, Bengal Intelligent Park, Sector- V Recent transactions (area in sq. ft) Recent transactions (area in sq. ft) 176,000 100,000 18,000 10,000 9,000 55,000 44,000 22,000 Hadapsar Kalyani Nagar (Amdocs) (Hexaware Technologies) (Mellon Bank) Hadapsar (Reflexes) Hadapsar (DE Shaw) (SQL Star) Banjara Hills Banjara Hills Begumpet (VSNL) (ASRI Technology Consulting) Madhapur CBD (Bund Garden/Camp Road) Off CBD (Kalyani Nagar) Off CBD (Deccan Road) Suburb (Aundh) Capital values (in Rs per sq. ft) Rental values (in Rs per sq. ft per month) 7,000 6,000 5,000 4,000 3,000 2,000 1,000 2002 2003 2006 2005 2004 2007 2002 2003 2006 2005 2004 2007 70 60 50 40 30 20 10 Capital values (in Rs per sq. ft) Rental values (in Rs per sq. ft per month) 5,000 4,000 3,000 2,000 1,000 2002 2003 2006 2005 2004 2007 2002 2003 2006 2005 2004 2007 50 40 30 20 10 CBD SBD PBD CBD PBD Hi-tech City SBD Banjara Hills/ Jubilee Hills CBD (Connaught Place) Noida Gurgaon Kalyani Nagar Hinjewadi Baner Aundh Virman Nagar Deccan Road CBD Bund Garden Hadapsar Magarpatta SBD BBD Bagh CBD Park Street PBD Salt Lake PBD Rajarhat Worli Malad/ Goregaon Andheri Kurla Powai/ Vikroli belt Bandra Kurla Belt Lower Parel Nariman Point Illustration: Malay Karmakar, Graphic: Ahmed Raza Khan/Mint