Profile: Bangalore City As the real estate sector is opened to Foreign Direct Investment (FDI) (and BA announces direct flights from London), Bangalore – the IT capital of India - is poised to become a major growth city

The first half of 2005 has witnessed net absorption of approximately 4.7 million sq ft in Bangalore in the commercial real estate sector. IT software services companies continue to be the main drivers of demand for commercial office space.

Commercial office space supply for 2005 is pegged at 14 million sq ft across Bangalore City (including Grade A & B). Rental values and capital values have witnessed a marginal increase in the Central Business District (CBD). Incoming supply will be boosted through the space being developed with multiple blocks in a new IT Park.

Demand for Grade “A” commercial space has been increased in the CBD, resulting in a pre-commitment of space that is under construction. Approximately 218,000 sq ft will be available for lease in the CBD as companies move out to their own campus or larger space away from the CBD.

However it is likely that new developments in the CBD will be limited due to the lack of availability of land as well the prohibitive capital values. This is reflected in the vacancy level which stands at 4.33% for the CBD as against approximately 13% for the entire city.

IBM has recently announced it is setting up a software development campus in Bangalore as part of its expansion plans in India. At present, IBM has four leased facilities in Bangalore from where its global services, business transformation, software laboratories and the application management services are run. It has over 25,000 employees in India, most of whom are based in Bangalore. Cisco Systems has also revealed that it would develop an integrated campus in the city with an investment of US$800 million.

The state government (Karnataka) itself runs the National Informatics centre from Bangalore, for advanced e-government services. The centre is equipped with SAN (Storage Area Network) and one T-byte of disk space with nine servers of heterogeneous operating systems and RDBMS.

The high-tech Indian city is also home to major Indian IT outsourcers, including Infosys, Tata Consultancy Services and Wipro Technologies, as well as many overseas IT companies. Reuters opened its business data centre in Bangalore last year for content services and it is planning to extend operations to process finance transactions for the Group in areas of general accounting services and cash applications.

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