Bangalore and Chennai Tech Hubs Face Rising Vacancies
The commercial real estate market in key technology centers like Bangalore and Chennai is experiencing a surge in unoccupied properties, posing a growing challenge for real estate developers. This predicament is exacerbated by the relocation of software companies to more attractive locations.
Bangalore's Whitefield Sees Oversupply
In Bangalore's Whitefield area, once a sought-after location for IT firms, the supply of office spaces has drastically outpaced demand. In 2007, this discrepancy reached 300,000 square feet, with approximately 8% of the developed area left vacant, as revealed by data from real estate consultancy Cushman & Wakefield (C&W). Price stagnation is evident, and the outlook is worsening. During the first quarter of 2008, the imbalance between demand and supply widened to over one million square feet.
Chennai's OMR Cluster Struggles
While Whitefield faces difficulties, the Old Mahabalipuram Road (OMR) technology cluster in Chennai's outskirts is grappling with a much more severe downturn. Throughout 2007, only nine deals were concluded. Of the four million square feet of office space that became available last year, a mere 1.7 million square feet were occupied. Simultaneously, rental prices plunged by 18%, and the vacancy rate climbed to 11%, according to C&W data. The majority of the over half a million square feet added to the market between January and March remained unoccupied.