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Creating Classy Commercial Space
Posted by Pradeep Sadanapalli | May 18, 2008 | 428 views
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Loading ...Jones Lang LaSalle’s first QR takes a re-look at business districts after repeal of ULCA, writes K. Srinivas Reddy.
If one expected that the shift of airport from Begumpet to Shamshabad would reduce the demand for office space in core areas of the city and also on the suburbs, one would be mistaken. The airport relocation had virtually no impact on demand for office space. Banjara Hills and Jubilee Hills still continue to enjoy the demand.
The repeal of the Urban Land Ceiling Act (ULCA) in Andhra Pradesh is expected to release large swathes of undeveloped land for development, fuelling the creation of some ‘quality commercial space’ in the coming years, the first quarter report of Jones Lang LaSalle mentions.
The report, released last week, had another interesting finding. The Central Business District (CBD) enjoys best intra-city connectivity than other micro-markets in the city. The weighted average of rental values of the two micro-markets rose significantly by 47 per cent in quarter one of 2008 compared to the same period last year. While the CBD witnessed a 51 per cent increase, the Secondary Business District (SBD) saw an increase of 33 per cent due to rising demand and good support infrastructure.
The SBD, which includes prime residential areas of Banjara Hills and Jubilee Hills, enjoyed good infrastructure in addition to good surroundings, providing a good working environment and hence a high demand in these areas resulting in continuous rise of rental and capital values, the report said.
Grade A Office–Suburbs:
In respect of Grade A office demands in Suburbs (Hi Tec City and Gachibowli), the report points out that absorption in the suburban market, which showed brisk activity towards the close of 2007, witnessed a significant decline in first quarter of 2008. The demand for commercial buildings within the IT SEZs had seen an increase as occupiers sought to avail the SEZ benefits. A high volume of pre-pleasing was observed in SEZ buildings , while IT parks saw a slight decline as occupiers turned their attention towards SEZ projects.
Another trend that came to light was that occupiers were preferring ‘built-to-suit’ properties within the IT SEZs.
The report foresaw a situation where IT SEZs command a premium due to rising demand and slow supply. Land prices were also expected to stabilise and thus capital values would witness little increase.
Demand in Shamshabad to increase:
In view of the operationalisation of Rajiv Gandhi International Airport, demand will rise in the emerging suburban micro market of Shamshabad once the infrastructure projects are completed to improve the poor connectivity to airport.
There was a likelihood of emergence of a new suburban micro markets like Uppal and Pocharam areas, with the completion of the first building in K. Raheja Mindspace IT SEZ in Pocharam. Hi Tec City will still be witnessing the highest demand due to an existing cluster of multinational occupiers, support infrastructure and cost-effective rentals, the report forecast.
Retail Segment:
There is evident rise in demand for branded products over the last few years primarily led by increasing youth population with rising income levels.
This has led to a trend where organised retail was gradually making its mark in Hyderabad market. In this segment, demand still remained high in prime central market, primarily in the Banjara Hills and Jubiles Hills areas, which are closest retail destinations for the IT hub of the city – Hi Tec City and Gachibowli.
Industrial Segment:
Hyderabad which has been predominantly a service-based industry, has now started focussing on industrial investment in sunrise sectors like semiconductor, apparel manufacturing, gems and jewellery and pharma industries.
Active Government policie and existing national research centres have driven demand for bio-technology and pharma industries. Initiatives like Genome Valley and Nanotechnology Park are expected to create extensive infrastructure in biotechnology.
Prices of prime industrial land in industrial estates have been rising continuously, due to low supply and also because of land use conversion from industrial to commercial While the current land prices in city range from Rs. 1 crore to Rs. 2.5 crore per acre.
Land values in industrial areas outside the city limits are witnessing a nominal rise as there is availability of land. The prices range from Rs. 10 lakh to Rs. 15 lakh per acre. The report forecasts that while industrial land prices within the city area are expected to rise, those on the outskirts are likely to remain stable or witness a nominal appreciation.
SOURCES:
The Hindu
Topics: SEZ, Consumer Market, Business News, Real Estate |
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