IT makes a real impact!

IT makes a real impact!

Property Trends

Bangalore has carved a place for itself as the IT hub of India. While several IT companies started out with independent buildings at strategic locations, developers soon came to see the advantages of building technology parks on a large scale. We now have Bagmane Tech Park, Manyata Tech Park, International Tech Park, Cessna Business Park, the developments at Whitefield and so many more in the south corridor.

Impact on other areas

When a large project comes up in any area, there is definitely a flurry of real estate activity around it. The impact is of course felt on the prices as well. Says KPM Das, Vice President and Head - Operations, MindTree Ltd, “Such projects significantly add to the brand. Whitefield and Doddenakundi on Outer Ring Road are typical cases in point. Despite the fact that it is 15 -20 km from the CBD, more of MNCs and associated real estate development tipped the scales in favour of the entire Bangalore East region. This area commands a premium on rentals simply because of the eco-system of ITPL, MNCs and IT infrastructure.”

R Balaji, CEO, Propmart, an end-to-end property solutions provider, reiterates this point. He says, “Real estate prices in the vicinity of IT parks will certainly escalate, particularly on the residential front. Huge projects will house a lot of multi-national companies which will in turn have a lot of employees. Some of the employees may want to live closer to their workplace.

This will increase rental as well as sale price of residential units. For instance, after big MNCs occupied Manyata Tech Park on Hennur Ring Road, the prices in the area for residential units shot up by almost 30 per cent to 40 per cent.”

Taking a broad spectrum viewpoint, Karun Varma, Managing Director - Bangalore, Jones Lang LaSalle Meghraj says there is definitely a demonstrable impact of such projects on an area.

A micro-location tends to be completely transformed, attracting quality workforce, boosting demand for organised retail and support services such as cargo hubs and warehousing. There is an escalation in the demand for housing, and there is an accent on improvement of infrastructure. This naturally pushes up real estate prices in such a location.

What goes into the development of a tech park?

Feasibility in multiple aspects is the key to the development of a tech park. Commenting on the factors that a company may look for when scouting for real estate, KPM Das says, “Besides the presence of other companies, there are essential features that a company looks for when finalising real estate for occupancy including easy access to a four-lane road, availability to BMTC bus routes, neighbourhood star hotels, availability of service apartments, shopping complexes/malls and multiple entries and exits.

“With the proliferation of land deals, there is a significant overhead in checking out land titles and lease terms.” Adds R Balaji, “Builders generally prefer to construct large commercial projects in peripheral areas and outskirts, especially where there is scope for infrastructural development.

For example, when Wipro moved into its Sarjapur Road premises, the area was still under development. Today, the surrounding areas have 5,000 residential units with multiple residential projects in the pipeline to cater to the growing demand in the area.”

Impact on the IT industry

Along with large scale peripheral development, the IT industry too will have its share of the impact. Karun Varma reiterates a point made by Mike Holland, CEO of Assetz when he says, “It is the industry which leads such projects, not the other way around.” Karun adds, “State-of-the-art tech parks respond to the requirements of globalisation. Nevertheless, they do lead to the absorption of large chunks of land, transfer of technology and the introduction of LEED-certified structures in areas that would otherwise never have witnessed them. “The Tech parks on Outer Ring Road in Bangalore, Malad in Mumbai and Old Mahabalipuram Road in Chennai have transformed these areas from what they were 10-15 years ago. Areas like these attract significant investment, which naturally increases prices.”

Positive impact

KPM Das feels there is a collateral and positive impact in the neighbourhood - associated facility management and logistic-needs lead to generation of contractual jobs in services and raise the living standards of residents in the areas around.
A lot of contractual staffing is drawn from the villages/shanties around and downstream small businesses spring up to cater to the floating population. Security has added significance and companies invest to cover this risk.  In areas like Whitefield and Outer Ring Road, government and corporation priorities lead to better infrastructure and sanitation support.