It is believed that the multinational information technology companies are on the lookout for property around major Indian cities. This is with the purpose to go on an expansion mode of the offices as well as look out for more people to run them. The real estate sector which for the past two years, is currently struggling with stooping sales and rising inventories is seeing brisk investment flow now.
In the last few months, around a dozen big-ticket lease agreements have been signed by these companies. It includes one by Oracle locked for 400,000 square feet of commercial space in Hyderabad.
Apart from this, CISCO, SAP Labs, Dell and Accenture are the other ITeS/ IT majors which have acquired or are about to acquire large office spaces. This is to accommodate their anticipated headcount growth.
According to an executive form Cushman & Wakefield, he said that after a situation of downward trend in 2013, the office market is likely to remain appealing for occupiers with steady increase in absorption. Moreover, with commercial real estate rental on low, the cost of availing office space has become very appealing.
On the Outer Ring Road in Bangalore, German-headquartered SAP Labs has picked up over 200,000 sq. ft. office space in RMZ Ecoworld. This is apart from the 400,000 sq. ft. that it is building in order to expand its campus in Bangalore. Amazon too has added 645,000 sq. ft. in SP Info City in Chennai.
As per the rule, companies usually provide 75-80 sq. ft. of space per employee. The other ITeS/ IT companies which have bought space of late are Adobe and Accenture. Whereas, Adobe has bought 250,000 sq. ft. in Bangalore’s Prestige Tech Platina, on the other hand, Accenture has taken over 400,000 sq. ft. of office space on the city’s Hosur Road.
Besides, the software firms and global IT services are facing two major challenges — stiff competition and constantly changing technology environment.
Moreover, companies are trying to shoot up their research and development strength besides shifting more and more high-value R&D work to their India centers. In the current fiscal, according to Nasscom, the IT export market is slated to grow by 12-14%.
It has been noticed that there are some companies which choose to expand in the same campus like CISCO, IBM and Dell. Cisco, currently occupies 2.3 million sq. ft. at Cessna Business Park in Bangalore. In the same facility, it has additional 0.5 million sq. ft. under construction. On the other hand, Dell is also setting up a 400,000 sq. ft. in the already existing campus in the city.
According to Cushman & Wakefield, commercial real estate absorption is likely to pick up at a growing pace with 28 million sq. ft. to be absorbed by 2015.