The stock of unoccupied properties with real estate developers in the main technology hubs of Bangalore and Chennai is mounting and indications are that their problems will only get worse as software companies head towards greener pastures.
In Bangalore’s Whitefield suburb, once a magnet for IT firms, supply outstripped absorption by 3,00,000 square feet in 2007 and about 8% of the developed area remained vacant, data from real estate consultancy Cushman & Wakefield (C&W) show. Prices are stagnating and the situation is deteriorating. In the first three months of 2008, the demand-supply mismatch was more than a million square feet.
If Whitefield is in a bad way; the Old Mahabalipuram Road (OMR) technology cluster on the outskirts of Chennai is deep in the doldrums, with just nine deals in the whole of 2007. Of the four million square feet that came into the market last year, only 1.7 million square feet were absorbed even as rentals fell by 18% and the vacancy rate was up to 11%, again according to C&W data. Most of the more than half a million square feet that entered the market between January and March have gone a begging.