Bangalore may lead realty revival

Bangalore has emerged as a clear preference for sectors like office and retail, while coming a close third in the residential and hospitality according to Cushman & Wakefield, a retail estate research firm.

In its report Cushman & Wakefield GRI India Real Estate Investment report 2009: 'Survival to Revival - Indian realty sector on the path to recovery,' the firm said that Bangalore is expected to see the highest demand for office space in the period 2009 - 2013 with approximately 34 million sq.ft.

The expected recovery in the IT/ITeS sector would have a positive effect on the demand in Bangalore, the preferred location for many IT/ ITeS companies.

The demand for retail sector is also expected to be the highest in Bangalore with approximately 7 million sq. ft. while demand for residential is expected to be approximately 570,000 units over 2009 - 2013, with the highest compounded annual growth rate at 14 per cent.

The hospitality sector in Bangalore too is forecast to register the highest compounded annual growth of about 26 per cent in demand, followed by NCR at 24 per cent and Pune at 23 per cent.

The city of Chennai is expected to witness the second highest demand for office space in India between 2009 to 2013 with a projected cumulative 27.2 million sq ft and the city also holds the fifth largest demand share for retail and hospitality space demand in India.

Anurag Mathur, managing director, India, Cushman & Wakefield said that the office market in Chennai has seen a renewed interest from the corporate sector, post the economic crisis.

While demand will be visibly affected this year, "We expect the five-year horizon (up to 2013) to be upbeat for the commercial markets in the city. The retail and hospitality segments are also likely to see considerable demand in the coming years."

Chennai is likely to witness the second highest demand for office space after Bangalore of approximately 27.2 million sq.ft. by 2013. Good infrastructure, high quality construction and competitive pricing would be the key reasons for the location to see high demand from corporate sector.

Hyderabad is expected to witness office demand of 16.6 million sq. ft. over a five year horizon and records the highest compounded annual growth of approximately 28 per cent during 2009 - 2013 in the office sector along with Pune and Kolkata.

The residential demand for Hyderabad is expected to be 290,000 units with the highest compounded annual growth of 14 per cent in the next five years akin to Bangalore.

Mathur, further added that though the high growth trajectory of the previous years saw a setback during the global economic slowdown, the inherent strong economic fundamentals, low exposure to debt and state intervention, would help the sector to gradually return to the path of recovery and witness robust demand for real estate across sectors.