Secondary markets and new commercial areas in cities across India are now waking up to the real estate boom, with multinational companies favouring them over established markets. Propert experts attribute this growing trend largely due to greater supply, improved infrastructure, lower costs and availability of manpower.
For instance, IT majors IBM and Sapient that have already established their offices in Gurgaon recently leased space to open offices that are as big as 1,80,000 sq ft and 1,25,000 sq ft respectively in Noida.
Anshuman Magazine, CMD, CB Richard Ellis South Asia that brought out a report on office rentals in the fourth quarter of 2007, said: “The reason is simple – supply creates demand. Though demand for Gurgaon will always be there, Noida is gaining popularity among corporate houses owing to the increasing supply there. Though some companies like HCL and Computer Science Corporation had established their presence in Noida nearly a decade ago, there was a lull in the market after that for a few years owing to low supply. Now that has changed and companies are making a beeline for Noida.”
For corporates it is a win-win situation. Sandeep Dhar, MD of Sapient India, said: “We considered Noida as a viable option because of its connectivity, availability of talent and because it is an upcoming town. We also wanted to increase our footprint in NCR.”
The trend is similar in Mumbai, where Lower Parel, Worli and the upcoming Bandra-Kurla complex are gaining popularity vis-à-vis Nariman Point. Reliance Capital has taken up a huge space — of 1,60,000 sq ft — in Lower Parel and Worli, while GE Capital has leased 11,000 sq ft in the Bandra-Kurla complex. That's not all. Many multinationals are even opting for peripheral areas like Navi Mumbai and Thane to set up their offices.
The CB Richard Ellis report said:. “The limited supply coming into the market is being absorbed rapidly. In addition to established locations like Goregaon, Malad and Powai, a large amount of supply is expected in areas like Kanjurmarg, Vikhroli, Navi Mumbai and Thane. These locations will see tremendous activity towards 2009-10 once this supply hits markets.”
Experts say cheaper rent is the key reason for corporates setting up offices in new areas. For instance. the going rate in Gurgaon is Rs 100-150 per sq ft, while Noida is nearly 50 per cent cheaper. “This is not a shift to Noida from Gurgaon, but Noida becoming a preferred destination for companies in expansion,” said Pankaj Jain, executive director, Realistic Realtors, a leading broker in the Capital.