Investors Choice

India becomes the favorite investor’s hub for office space for IT, ITES and the BPO sector. As a result of this, the real estate market in top Indian cities is witnessing a boom. Apart from the IT/BPO sector, the ancillary industries (banking, insurance, hotels, transport, catering) which are growing as a result of the IT/BPO office space boom are going to account for a large share of the real estate boom.
These sectors account for 70-80% of the commercial real estate or office space absorption in these cities. This heavy absorption by the knowledge industry has resulted in the total commercial or office space absorption in India going up to almost 15 million sq ft in 2004 from 8-9 million sq ft a few years ago. In terms of IT and real estate activity levels, the Indian cities can be classified as Tier I, Tier II and Tier III.
Tier I cities are those which account for almost 60% of the real estate office space absorbed.
Tier II cities are the ones which saw substantial IT activity and saw good real estate growth in the last few years
Tier III cities are the ones that are yet to emerge as key IT/BPO office space destinations.
As the boom continues, the real estate investors from India and all over the globe are setting up operational bases in the top cities Tier I and Tier II cities to cater to the increasing gap between the demand and supply of office space, residential and commercial properties in India. They can be considered as the hottest destinations with sustained buoyancy, offering double digit returns on real estate investment.
The major investments in the corporate sectors office space mainly the IT and BPO sectors are concentrated in the premier cities of India like Delhi, Mumbai, Bangalore, Chennai, Kolkata, Hyderabad, Gurgaon, Chandigarh, Pune etc. The real estate development in these cities for office space, residential and commercial properties in the last few years has been phenomenal and the realty prices in these cities have also skyrocketed.
Real estate investors in any part of the world would always opt for cities to set up homes or corporate office spaces where there is a planned outlay of the city and its associated infrastructure. Coming to basic infrastructure and investment options Delhi, Mumbai and Bangalore have emerged as the top three investors’ choices for real estate investment. The realty in hot metro destinations is driven by the global outsourcing wave sweeping India. As far as the commercial, retail and entertainment segments are concerned; estimates suggest that by the end of 2008, the eight largest Indian cities will experience a supply of around 66 million sq ft of new retail space through more than 200 proposed retail centers.